CLIMATE CHANGE LEVY (REGISTRATION AND MISCELLANEOUS PROVISIONS) REGULATIONS 2001, AS AMENDED

The Climate Change Levy is a tax applied to energy consumed by business and the public sector and is automatically added to energy bills.

Since April 2012, the Climate Change Levy (CCL) will be applied at the following rates to sales of electricity, coal, natural gas and non transport related Liquefied Petroleum Gas (LPG).

	2012	Units
Electricity	0.509	p/kWh
Natural Gas	0.177	p/kWh
LPG	1.137	p/kg
Any other taxable commodity	1.387	p/kg

This cost is offset by a cut in employers’ National Insurance contributions, plus additional support for energy efficiency schemes and renewable sources of energy.

Climate Change Agreements are available within certain industrial sectors. Participation in the sector scheme will result in a reduction in the levy by 65% in exchange for commitment to the sector negotiated energy or carbon reduction targets. Failure to meet targets would lead to the need to buy carbon credits to make up the shortfall, a situation that is potentially very expensive. 

Amended rules for administering exemptions and other relief from the climate change levy were introduced by the Climate Change Levy (Miscellaneous Amendments) Regulations 2005. These regulations deal with treatment of exemptions for CHP plant and also cover the extension of levy exemption to various recycling processes.

The Climate Change Agreements (Energy Intensive Installations) Regulations 2006 and The Climate Change Agreements (Eligible Facilities) Regulations 2006 expand the types of installations that may be covered by a climate change agreement to include other activities such as heat-treating metals. A 2009 amendment adds certain plastics processes, non-domestic launderettes and salt production to the list.

The Climate Change Levy (General) (Amendment) Regulations 2007 replace half rate (50%) reductions for energy intensive non-PPC industries such as the horticultural sector with full reduced rate (80%) reductions, and removes to 2-month time limit on generators to report electricity generation from combined heat and power (CHP) for the purposes of obtaining Levy Exemption Certificates (LECs).

The Finance Act 2009 amends the Finance Act 2000 so that the Secretary of State may issue or vary a certificate specifying certain taxable commodities are ineligible for reduced rate under the Climate Change Levy (CCL). It is also amended to allow the Secretary of state to remove the reduced rate of the CCL where targets set by a climate change agreement (CCLA) have not been met. The amendments have effect where the certification period began on or after 1st April 2009. 

The Finance Act 2011 includes gas supplies in Northern Ireland in the levy. If the supply is treated as taking place before 1 April 2011, the levy is £0.00059 per kilowatt hour and if it is on or after that date, it is £0.00062 per kilowatt hour. It also allows the Treasury to suspend the exemption for supply for use in recycling processes where necessary.

A 2010 amendment to the Climate Change Levy (General) Regulations 2001 to increase the time limit for repayment from 3 to 4 years.

A 2011 amendment to The Climate Change Levy (General) Regulations 2001 remove the requirement for the recipient of excluded, exempt or reduced rate supplies to provide a copy of the supplier certificate to HM Revenue and Customs. The formula used in the case of excluded, exempt or reduced rate supplies to calculate the percentage of the supply on which the Climate Change Levy (CCL) is not due, has been amended. The saving in the CCL has been reduced from 80% to 65% from 2011. An announcement in the 2011 Budget said that this would return to 80% by 2013.

A 2011 amendment to the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005 removes lead from the list of metal recycling processes where a CCL exemption is granted.

The Climate Change Levy (Suspension of Recycling Exemption) Order 2011 removes the CCL exemption for taxable commodities supplied for use in steel and aluminium recycling processes.

Guidance

HMRC offer the following guidance documents: general; registering; CHP; relief and special treatment for taxable supplies; renewable electricity; and, penalties and interest.

Applicability

Fabricated Examples have entered into a climate change levy agreement (CIA/F1234) within the Chemical Industries Association agreement. Monitoring data of their consumption and targets has revealed that to date, they have achieved their agreed targets. Data was submitted in December 2006 showing the company are in compliance with their milestone target and have ringfenced approximately 1000 tonnes of CO2. 

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