How does the Climate Change Levy affect my bill?
The Climate Change Levy (CCL) is a tax added to business gas and electricity bills at 0.801 pence per kWh from 1 April 2026, rising to 0.827p from 1 April 2027. VAT is then charged on top. Very small users and domestic or charity non-business use are exempt.
What it is
The CCL is a government charge on business use of energy. It shows as a separate line on your bill, charged per kWh. The main rate is the same for electricity and gas: 0.775p/kWh in 2025-26, 0.801p/kWh from 1 April 2026 and 0.827p/kWh from 1 April 2027 (GOV.UK: Climate Change Levy rates).
Worked examples
Electricity
A shop uses 24,000 kWh a year. CCL: 24,000 × £0.00801 = £192.24. Add 20% VAT on top: £38.45. So the levy costs about £230.69 over the year.
Gas
A workshop uses 60,000 kWh of gas. CCL: 60,000 × £0.00801 = £480.60.
Next year
The shop's 24,000 kWh at 0.827p = £198.48, which is £6.24 more than at 0.801p.
The DESNZ average prices for the second quarter of 2026 already include CCL: 24.51p/kWh for electricity and 5.28p/kWh for gas (DESNZ Quarterly Energy Prices, September 2026). On those averages, CCL is a small slice of electricity but a larger share of gas.
Who does not pay
- Domestic use, and charities for non-business activities (GOV.UK: Exemptions from Climate Change Levy).
- Small amounts: supplies below 1,000 kWh a month of electricity or 4,397 kWh a month of piped gas are treated as domestic and excluded.
- Mixed use: relief applies to the whole supply when at least 60% is qualifying; otherwise only to that portion.
Full list in who is exempt from the Climate Change Levy.
Reduced rates: Climate Change Agreements
Eligible energy-intensive businesses with a Climate Change Agreement get a discount on the levy: 92% off for electricity and 89% off for gas. On the shop figure above that would turn £192.24 into about £15.38, but only manufacturers and similar energy-intensive operators qualify, not typical shops. See climate change agreements.
How to spot it on your bill
Look for "CCL" or "Climate Change Levy", with kWh and rate shown. If you qualify for an exemption but it is shown as charged, send a declaration and ask for correction. Our guide to reading your bill helps, and the VAT and CCL calculator does the sums.
Why it matters for comparing quotes
Some quotes show rates including CCL and others exclude it. A rate of 25.00p/kWh excluding the levy is really 25.801p/kWh including it at the current main rate. Over 30,000 kWh that is 30,000 × £0.00801 = £240.30 you will pay on top, so always ask which basis a quote uses.
Is it ever refunded?
If you were charged the levy and later found you were exempt, ask your supplier to correct earlier bills; see refunds and credits.
Next steps
- Find the CCL line and check the rate against the current main rate.
- Check whether you fall under an exemption.
- Read the wider overview: VAT and Climate Change Levy.
Sources
General information only. Energy prices, rules and supplier terms change; check the latest position with your supplier, Ofgem or the Energy Ombudsman before you act.