CCL exemptions and reliefs: when Climate Change Levy shouldn't be charged

CCL shouldn't be charged on domestic use, a charity's non-business use, or small supplies within the de minimis limit of 1,000 kWh a month of electricity or 4,397 kWh of gas. Climate change agreement holders pay a reduced rate.

HMRC's Excise Notice CCL1/3: Climate Change Levy reliefs and special treatments for taxable commodities calls some of these supplies "excluded" and others "exempt" or "reduced": either way the main rate of CCL isn't charged in full. The CCL rates page has the rates; the calculator works out the levy when it is due.

Domestic use and charity non-business use

A supply is excluded from the main rates of CCL if it is for domestic use or a charity's non-business activities (paragraph 2.1 of the notice). Domestic use means houses, flats and other dwellings, caravans, houseboats, care homes, student accommodation, self-catering holiday accommodation and similar (paragraph 2.2). Hospitals, prisons, hotels and similar establishments are not domestic (paragraph 2.3), and schools and universities pay the main rate unless they are charities doing non-business work (paragraph 2.7).

A charity that also does business on the same premises, for example hiring out a hall, can apportion its use. To claim the charity relief, a VAT certificate must be given to the supplier (paragraph 2.6). See the VAT declaration guide.

De minimis: small quantities

Small supplies are treated as domestic even when the customer is a business. The limits in paragraph 2.5 are 1,000 kWh a month for metered electricity and 4,397 kWh a month for piped gas, to one customer at one premises. They apply whether the bill uses a meter reading or an estimate. No certificate is needed within the limits; the supplier keeps records.

To test a bill, divide the kWh by the days in the period and multiply by about 30. The CCL calculator flags a supply that may be within the limit.

A common error: a small shop or office within the limit is charged both 20% VAT and CCL. HMRC's manual says supplies that are reduced-rated for VAT are, in general, not liable to CCL (HMRC internal manual VFUP5000: Climate change levy (CCL)). Both charges are likely wrong. See the VAT guide.

Mixed use

If a site is partly domestic or charity non-business use and partly business, the whole supply is treated as qualifying when enough of it qualifies, and otherwise the main rate applies only to the part that doesn't (paragraph 2.8 sets the share). The customer gives the supplier a VAT certificate with the exact percentage for each premises (paragraph 2.9).

Landlords, tenants and community heating

When a landlord or another intermediary supplies energy for domestic or charity use, relief depends on the final use, and the intermediary gives its supplier a VAT qualifying-use certificate (paragraph 2.11). A community heating scheme, such as a boiler serving a block of flats, is covered by the domestic exclusion if a VAT certificate covers it or the operator certifies the relief (paragraph 2.12).

Climate change agreement (CCA) reduced rate

Businesses with a climate change agreement pay a reduced rate, which is the main rate less a percentage discount. From 1 April 2026 to 31 March 2027 the discount is 92% for electricity and 89% for gas (section 4 of the notice; Climate Change Levy rates (GOV.UK)). The relief is subject to certification, so check your supplier holds your certificate and that the bill shows the reduced rate.

Other CCL exemptions

Some uses are exempt from the main rates subject to the customer certifying them to the supplier: energy not used as fuel (for example in electrolysis), metallurgical and mineralogical processes, combined heat and power, and supplies to energy producers, among others. These reliefs are for particular processes: the table in paragraph 1.3 of the notice lists them, and your supplier needs your certificate before it can apply them.

Charged CCL by mistake? How to get it back

Work out whether CCL is due: use the average kWh a month against the de minimis limit, and think about what the site is used for.
Write to your supplier with the bill number, the CCL line, the reason and the source above. Ask them to correct and re-issue the bill, or credit the CCL and the VAT on it.
If you hold a certificate or a CCA, send it and ask them to apply it from the right date.
If the supplier doesn't fix it, follow the steps in how to complain about a business energy bill.

Sources: Excise Notice CCL1/3: Climate Change Levy reliefs and special treatments for taxable commodities; HMRC internal manual VFUP5000: Climate change levy (CCL); Climate Change Levy rates (GOV.UK).