Key takeaways, 2026
- Main rate: 0.801p per kWh on both gas and electricity from 1 April 2026, after the 2024 rebalancing brought the two fuels into alignment.
- Typical annual cost: around £240 for a micro-business, £400 for a small business, £921 for a medium-sized one.
- Two legal exits: a 100% renewable electricity tariff removes CCL on power, and de minimis usage (below 1,000 kWh electricity / 4,397 kWh gas per month) removes the levy entirely.
- CCA discount: energy-intensive sectors with a Climate Change Agreement pay 92% less on electricity and 89% less on gas, coal and LPG.
0.801p
Electricity main rate
Per kWh, 2026 to 2027.
0.801p
Gas main rate
Per kWh, 2026 to 2027.
92%
CCA discount
On electricity with a CCA.
1,000
kWh / month
De minimis threshold (electricity).
What the Climate Change Levy actually is, in 2026
The Climate Change Levy is an environmental tax on the gas, electricity, LPG and solid fuels consumed by UK businesses. It was introduced in 2001 as part of the country's transition away from fossil fuels and forms one of the load-bearing parts of the path to net-zero by 2050. The levy is charged in pence per kilowatt-hour consumed, regardless of what you paid for the energy itself, so it is a tax on volume not value.
Two things have changed in recent years that most businesses still have not absorbed. First, the gas and electricity rates were rebalanced between 2022 and 2024, lifting gas from 0.465p/kWh to 0.775p/kWh so that the two fuels now move together: both sit at 0.801p/kWh for the year from 1 April 2026 and are scheduled to rise to 0.827p/kWh in April 2027. Second, the Climate Change Agreement discount holds at 92% on electricity and 89% on gas and solid fuels, with a separate 77% rate for LPG, so an energy-intensive site with a valid CCA pays only a fraction of the headline rate.
Who pays the CCL, and who is quietly exempt
The CCL is charged on businesses operating in the industrial, commercial, agricultural and public service sectors. Three groups are excluded automatically, and a fourth can opt out by signing a Climate Change Agreement.
You pay full CCL
- ▸Most industrial, commercial and agricultural businesses
- ▸Public services (hospitals, councils, schools above the threshold)
- ▸Office-based service businesses on a standard tariff
- ▸Retail, hospitality and leisure above de minimis usage
You can opt out
- ▸Charities running non-commercial activities
- ▸Businesses below de minimis (1,000 kWh elec, 4,397 kWh gas per month)
- ▸Anyone on a 100% REGO-backed renewable electricity tariff
- ▸Energy-intensive industries with a valid Climate Change Agreement
CCL main rates, 2026
There are two rate families set by HMRC: the main rates applied to most businesses, and the Carbon Price Support (CPS) rates which apply only to electricity generators and combined-heat-and-power stations. For 99% of UK businesses, only the main rates matter.
CCL main rate trajectory
Gas caught up. Electricity is moving again.
Rates per kWh, 1 April each year. Rebalanced in 2024, both fuels climbing together.
Gas, 2022 → 2026
+72%
£0.00775
£0.00775
£0.00775
£0.00775
£0.00801
2022
2023
2024
2025
2026
View as data table
| Taxable commodity | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| Electricity (£/kWh) | 0.00775 | 0.00775 | 0.00775 | 0.00801 | 0.00827 |
| Gas (£/kWh) | 0.00672 | 0.00775 | 0.00775 | 0.00801 | 0.00827 |
| LPG (£/kg) | 0.02175 | 0.02175 | 0.02175 | 0.02175 | 0.02175 |
| Any other taxable commodity (£/kg) | 0.05258 | 0.06064 | 0.06064 | 0.06264 | 0.06468 |
Source: HMRC, Climate Change Levy rates.
The Carbon Price Support (CPS) rates are a separate set of rates that apply only to fuels used to generate electricity, such as at power stations and combined-heat-and-power plants. They have been frozen since 2016 at 0.331p per kWh of gas, 5.28p per kg of LPG and 1.5479p per GJ of coal and other solid fossil fuels, and run unchanged to 31 March 2028. If your business simply consumes energy rather than generating it, the CPS rates do not affect you and only the main rates apply.
How much the CCL adds to your bill
The amount you pay depends only on how much energy you actually consume. At the 2026 to 2027 main rate of 0.801p per kWh, the table below shows what the levy adds to a typical SME's annual bill, before VAT.
| Business size | Electricity use | Gas use | CCL on electricity | CCL on gas | Total CCL/year |
|---|---|---|---|---|---|
| Micro | 15,000 kWh | 15,000 kWh | £120 | £120 | £240 |
| Small | 25,000 kWh | 25,000 kWh | £200 | £200 | £400 |
| Medium | 50,000 kWh | 65,000 kWh | £401 | £521 | £921 |
| Large industrial | 200,000 kWh | 350,000 kWh | £1,602 | £2,804 | £4,406 |
VAT at 20% is then applied to the bill including the CCL, so the real cost is slightly higher than the figures above.
Three legal ways to reduce or eliminate the CCL
Every option below is available to all UK businesses, with different effort-to-saving ratios. The renewable route is the simplest and works for the vast majority of office-based or service businesses.
Switch to a 100% renewable tariff
REGO-backed green electricity removes the CCL on power entirely. Available from most major suppliers in 2026, often at the same or lower rate as standard tariffs.
Saves: 100% of electricity CCL
Claim the de minimis exemption
If you use less than 1,000 kWh of electricity or 4,397 kWh of gas per month, file form PP11 with your supplier to switch off the CCL line on your bill.
Saves: 100% of CCL on the qualifying fuel
Sign a Climate Change Agreement
Energy-intensive sectors can negotiate a CCA with the Environment Agency: 92% off electricity, 89% off gas, in exchange for a binding efficiency target.
Saves: up to 92% on electricity
The de minimis limits, in detail
If your monthly consumption stays below the values in the table, the supply is treated as domestic and the CCL is not charged. The thresholds are checked per supply per month, not annually.
| Fuel | Monthly threshold | Typical business below this |
|---|---|---|
| Metered electricity | 1,000 kWh | Sole trader, small office, microbrewery |
| Unmetered electricity | 1,000 kWh | Street lighting concession, signage |
| Piped gas | 4,397 kWh | Small retail unit, single-boiler office |
| LPG in cylinders | 50 kg | Catering trailer, market stall |
| LPG in bulk | 2 tonnes tank capacity | Rural site off the gas grid |
| Coal or coke | 1 tonne (held for domestic resale) | Solid-fuel retailer |
Source: HMRC, CCL exemptions.
Climate Change Agreements: the industrial exit
A Climate Change Agreement is a voluntary contract between an energy-intensive business and the Environment Agency. In exchange for the discount, you commit to a sector-specific energy-efficiency or carbon-reduction target, audited every two years. Miss the target and HMRC reclaims the full CCL retrospectively, plus a buy-out fee.
CCAs are negotiated through sector associations, not directly with the Environment Agency, so the practical first step is to find the trade body that represents your sector. Sectors with active CCAs include ceramics, paper, food and drink, textiles, foundries, glass, plastics, supermarkets, cold storage and the data-centre industry, which joined the scheme more recently and now accounts for a fast-growing share of CCA volume.
If your sector does not have a CCA umbrella, the route is closed for the current cycle. The next inclusion window is expected to open following the 2028 government review.
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Frequently asked questions
The Climate Change Levy (CCL) is a UK environmental tax charged on the energy your business consumes. For the year from 1 April 2026 the main rates are 0.801p per kWh of electricity and 0.801p per kWh of gas, after the gas and electricity rebalancing completed in April 2024 brought the two fuels into line. The levy is collected by your energy supplier and passed on to HMRC, and appears as a separate line on every business energy bill alongside VAT.
For a typical micro-business using 15,000 kWh of electricity and 15,000 kWh of gas, the CCL adds around £240 a year at the 2026 to 2027 main rates. A small business at 25,000 kWh of each fuel pays roughly £400 a year. A medium business at 50,000 kWh electricity and 65,000 kWh gas pays around £921 a year. The amount is always shown separately on your bill, in pence per kWh consumed.
Three groups can stop paying the CCL: charities running non-commercial activities, businesses that consume below the de minimis limits (1,000 kWh of electricity or 4,397 kWh of gas per month), and any business on a 100% certified renewable electricity tariff with valid REGO certificates. Filing form PP11 with your supplier activates the exemption for de minimis usage ; the renewable route applies automatically once you switch.
Yes, if your business is energy-intensive and signs a Climate Change Agreement (CCA) with the Environment Agency. From 1 April 2026 a valid CCA cuts the CCL by 92% on electricity, 89% on gas and other solid fuels, and 77% on LPG. The agreement requires you to meet a specific energy-efficiency or carbon-reduction target, audited every two years. Sectors that already have CCAs include ceramics, paper, food and drink, textiles, foundries and data centres.
VAT is a tax on the value of the energy you buy, charged at 20% of the total bill including the CCL. The CCL is a separate environmental tax charged on the volume of energy you consume, in pence per kWh, regardless of what you paid for it. The two are added on top of each other: VAT is applied to a sub-total that already includes the CCL.
Three routes work in 2026: (1) switch to a 100% renewable electricity tariff backed by REGOs, which removes CCL on electricity entirely ; (2) keep monthly usage below the de minimis thresholds (1,000 kWh electricity, 4,397 kWh gas) and file PP11 ; (3) if you are an energy-intensive industrial site, negotiate a Climate Change Agreement for a 77% to 92% discount. The renewable route is the only one available to non-industrial businesses and is by far the most common.