Climate Change Levy (CCL) exclusions, exemptions and reductions

CCL is not charged on all gas and electricity supplies. A number of supplies are either exclude or exempt from the levy or benefit from a reduced rate:

1. Exclusions:

Gas and electricity supplies that are charged at 5% VAT are excluded from CCL.
This applies to:

  1. Supplies of energy for domestic use, including supplies to landlords for use by domestic tenants, and supplies to residential properties such as care homes, student accommodation.
  2. Supplies of energy for use by a charity for non business purposes;
  3. Certain small quantity supplies to business customers


Where you tell us you use your energy for either 'a' or 'b' above we will always ask you to complete a VAT Certificate to tell us how much of your supply qualifies for 5% VAT treatment.

2. Exemptions

Some supplies are exempt from CCL. These include

  1. Electricity generated from renewable or qualifying CHP (combined heat and power) sources. Switching to green energy is both an opportunity to help reduce your carbon footprint and help reduce your business energy costs.
  2. Supplies used in some forms of transport
  3. Supplies used to produce other forms or energy (for example electricity)
  4. Supplies to good quality CHP schemes
  5. Supplies not used as fuel

If you contract with British Gas to be supplied with green energy, this should be specified in your contract.

If you are entitled to any other exemption from CCL, you will need to complete certain forms (a PP10 and a PP11). You will need to send a copy of the PP10 to HM Revenue and Customs, and the PP11 to British Gas Business. This should be done before we can apply the exemption. You should keep copies for your records. For further details, visit HM Revenue & Customs website.

3. Reductions

Energy intensive businesses may be entitled to a reduction in the amount of CCL charged. If your business is in an energy intensive sector and you enter into a Climate Change Levy agreement with the government to meet certain energy saving targets negotiated for your sector, you should be entitled to a reduction. Prior to 1 April 2011 this reduction was set at 80% of the rate of CCL. However, with effect from 1 April 2011 the 80% reduction has changed to 65% - the revised 65% reduction will apply following your annual review and once you have completed and sent to us a revised PP11 form (as under point 2 above). If you are currently entitled to a reduction, you should have received a letter from HM Revenue & Customs explaining what you have to do.

So that we can apply the reduction to your supply, you will need to complete forms PP10 and PP11 as under point 2 above.

If you have not entered into a Climate Change Agreement and you think you are entitled to, please visit HM Revenue & Customs website.

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