The Climate Change Levy, explained
Last updated: July 2026
The Climate Change Levy (CCL) is a government tax on energy used by businesses. From 1 April 2026 the rate on gas is 0.801p per kWh, the same as electricity, per HMRC. It appears as a separate line on your bill. Charities, domestic-scale users and some low-usage sites pay nothing.
CCL is one of the quieter lines on a gas bill. Most businesses never check whether they should be paying it at all. Some shouldn't be. This page covers the rates, who is exempt, and how to claim relief if that's you.
What CCL is and who pays it
CCL is charged on energy supplied to businesses in the industrial, commercial, agricultural and public services sectors. If you run a shop, an office, a workshop or a farm, the main rate applies to your gas by default. Your supplier adds it per kWh and passes it to HMRC. You don't register for anything. The levy has been running since April 2001, per GOV.UK, and exists to make wasted energy cost money.
The arithmetic is plain. A business using 25,000 kWh of gas a year pays 25,000 kWh × 0.801p = £200 a year in CCL at the 2026-27 rate. That is a worked example at the published rate. Your bill scales with your usage, nothing else.
CCL rates for 2026 and 2027
HMRC sets the rates. These are the main rates for gas and electricity, correct as of July 2026:
| Period | Gas (per kWh) | Electricity (per kWh) |
|---|---|---|
| 1 April 2024 to 31 March 2026 | 0.775p | 0.775p |
| 1 April 2026 to 31 March 2027 | 0.801p | 0.801p |
| 1 April 2027 to 31 March 2028 | 0.827p | 0.827p |
Two things worth knowing. Gas and electricity are now taxed at the same rate, which wasn't always true. And rates were held at 0.775p for two years before this April's rise, so if your CCL line went up in spring 2026, that's why. LPG sits at 2.175p per kg, frozen through 2027. Coal and other solid fuels carry their own rates, listed on the same HMRC page.
CCL is a small slice of the bill; for what the gas itself should cost per kWh, see our business gas prices page.
Who doesn't pay: the exemption checklist
You're excluded from CCL if any of these apply:
- You're a domestic user: homes don't pay CCL.
- You're a charity engaged in non-commercial activities: the condition is that you make no charge for those activities. Mixed-use premises need the qualifying and non-qualifying use split out.
- Your usage is small: gas supplies averaging no more than 145 kWh a day (4,397 kWh a month) are treated as domestic: 5% VAT and no CCL. For electricity the line is 33 kWh a day (1,000 kWh a month). A lot of small shops and offices sit under these thresholds without knowing it.
- The supply itself is exempt: energy not used in the UK, supplied to registered combined heat and power schemes, or used for certain transport uses carries no CCL.
There's also a discount rather than an exemption. Energy-intensive businesses with a Climate Change Agreement (CCA) get 89% off CCL on gas and 92% off electricity, at the rates in force through 2027-28. If you're in a CCA sector and haven't looked into it, that's the largest CCL saving available. Agreements run through your sector's trade association and are administered by the Environment Agency.
How to claim relief: the PP11 form
Relief doesn't happen automatically. You tell your supplier, using form PP11, the CCL supplier certificate. It states the level of relief that applies to you, and you send one form per taxable commodity, so gas and electricity need separate certificates. The form is on GOV.UK: PP11 supplier certificate download.
The timing rule matters. By law, your supplier must hold the certificate before applying any relief. Relief runs from when they have a valid PP11, so the month you delay is a month you pay in full. If you think you've been overpaying, ask your supplier about correcting past bills; tax credit claims go through HMRC form CCL200X, and Excise Notice CCL1/3 covers the detail.
Form PP10 goes alongside it, to HMRC rather than your supplier, with the supporting analysis for the relief you're claiming. Your accountant will recognise both forms. If they don't, send them this page.
Where CCL sits on your bill
ANNOTATED BILL IMAGE — real supplier bill, CCL line highlighted at 0.801p/kWh, alongside unit rate, standing charge and VAT lines.
On most bills CCL is a single line between your gas charges and VAT: your kWh for the period multiplied by the rate. Check the rate shown matches the table above. Suppliers do make billing errors, and a wrong CCL rate or CCL charged to an exempt site is exactly the kind of thing nobody spots for three years.
Questions people ask us
- Who pays the Climate Change Levy?
Businesses in the industrial, commercial, agricultural and public services sectors, through their energy bills. Domestic users, charities on non-commercial activities and sites under the low-usage thresholds don't pay it.
- How is CCL calculated?
Your kWh for the billing period multiplied by the main rate: 0.801p per kWh for gas in 2026-27. CCL also has separate Carbon Price Support rates, but those are paid only by owners of electricity generating stations and operators of combined heat and power stations, not by ordinary businesses.
- Is CCL VATable?
Yes. VAT law includes CCL in the value of the supply, so the 20% standard rate is charged on the CCL-inclusive amount. A tax on a tax, and entirely legal. The other direction is worth knowing too: supplies that qualify for the 5% reduced VAT rate, meaning domestic-scale, de minimis or charity non-business use, carry no CCL at all. Getting one wrong usually means the other is wrong too. The full VAT rules have their own page: see our guide to VAT on business gas.
- Does a green tariff avoid CCL?
No. CCL applies to renewable tariffs at the same rate as any other. Switching supplier doesn't change it either, because HMRC sets the rate and every supplier must charge it. The routes to paying less are the exemptions and the CCA discount above.
- Does CCL apply to small businesses?
Only above the thresholds. If your gas use averages no more than 145 kWh a day, the supply is treated as domestic: 5% VAT and no CCL, whatever your business does. Below that line, a CCL charge on your bill is worth querying.
Sources: HMRC, Climate Change Levy rates, GOV.UK (updated 27 November 2025); GOV.UK, Environmental taxes, reliefs and schemes; HMRC VAT Notice 701/19, Fuel and power; HMRC, PP11 CCL supplier certificate, GOV.UK. All figures checked July 2026.