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As the world becomes more aware of the impact of our changing climate and how important its maintenance has become, countries have begun implementing a variety of laws and/or taxes. These have been created to push businesses to become more climate-conscious of their impact on the planet. Climate Change Levy is one of these changes being implemented.
Climate Change Levy – What is it?
The Climate Change Levy is an energy tax that businesses must pay for every kWh they use, including Value Added Tax (VAT). It is a tax on both the consumption of gas and electricity. It was introduced as a way to make businesses more aware of the amount of energy they use and to push them to reduce their consumption.
Who Has to Pay Climate Change Levy?
All businesses that are required to pay Climate Change Levy will have it added to their energy bill and will therefore not have to pay for it separately. The Climate Change Levy applies to almost all sectors of business, from the industrial sector to the commercial sector, public sector, and agricultural sector. Climate Change Levy does not apply to the domestic and transport sectors.
What Is the Cost of Climate Change Levy?
Climate Change Levy depends entirely on a business’s consumption of energy and how it is calculated. Climate Change Levy is charged by units/kWh and has no effect on other aspects of the energy bill, such as standard charges.
Climate Change Levy rates differ for electricity and gas. The cost of Climate Change has increased since the time it was implemented. There was a 45% increase in the Climate Change Levy in 2018/2019.
Sites like Utility Bidder can keep you updated regarding changes in Climate Change Levy.
Do Charities Have to Pay Climate Change Levy?
Whether a charity has to pay a Climate Change Levy is determined for each case separately. Charities can be exempt from paying Climate Change Levy when their energy consumption is being used for non-business-related activities. They may also be exempt from paying Climate Change Levy if their income is based on donations.
Can Schools Be Climate Change Levy Exempt?
Schools cannot be exempt from Climate Change Levy unless they are charity-run schools. Schools can, however, pay a smaller Climate Change Levy amount when their energy consumption is related to residence. This means the energy used at university residencies or boarding schools are subject to a lower rate of Climate Change Levy.
How to Reduce Climate Change Levy?
Climate Change Levy can be reduced by almost 93% in some cases. Businesses that use vast amounts of energy can sign a Climate change agreement to reduce their Climate Change Levy costs. By signing this agreement, businesses agree to reduce their energy consumption and their carbon dioxide emissions; in return, they receive a 93% reduction of the Climate Change Levy on their electricity and 65% on other fuels.
Alternatively, some businesses may be entitled to a Climate Change Levy release; to see the amount that applies to them, they must submit a PP11 supplier certificate form.
Final Words
Climate Change Levy is an important taxation that is placed on businesses to push them towards environmentally friendly energy consumption patterns. It is something almost all businesses must pay and forces businesses to be aware of their energy usage.
