Most UK businesses are overpaying their energy taxes—and they don’t even know it. The Climate Change Levy offers substantial exemptions that could transform your bottom line, yet thousands of companies leave money on the table each year by missing them entirely. From established energy-intensive operations to those planning ahead for 2026’s hydrogen shifts, the relief available depends on understanding your specific eligibility. The difference between claiming what’s rightfully yours and remaining in the dark could mean thousands in unnecessary costs. Find out which exemptions actually apply to you.
What Is CCL and Why Exemptions Matter
If you’re running a UK business, you’re probably already juggling dozens of costs—but here’s one that might be flying under your radar: the Climate Change Levy, or CCL.
Introduced in 2001, CCL is a government tax on business energy consumption designed to push you towards greater efficiency. You’ll pay it on electricity, gas, and solid fuels used for lighting, heating, and power.
CCL is a government tax on business energy consumption designed to push you towards greater efficiency on electricity, gas, and solid fuels.
The rates are straightforward: roughly 0.465p per kWh for gas and 0.775p for electricity, plus standard VAT. However, if your business energy use falls below 33 kWh electricity and 145 kWh gas per day, you may be treated as a domestic consumer and exempt from the levy entirely.
Now here’s where exemptions matter—they’re your direct pathway to real savings. When you understand which relief options you qualify for, you can dramatically reduce your energy bills. A proactive approach to understanding your energy compliance obligations ensures you capture every available discount. Many businesses discover that working with specialists in comprehensive energy compliance solutions helps identify relief options they would otherwise overlook.
The problem is that many businesses miss substantial discounts simply because they don’t realise exemptions exist or know how to claim them.
Energy-Intensive Industries: Up to 92% CCL Relief
When you’re running an energy-intensive business—think manufacturing, chemicals, metals, or food production—your energy bills can be absolutely crushing.
But here’s the good news: you might qualify for a Climate Change Agreement (CCA) that slashes your Climate Change Levy (CCL) by up to 92% on both gas and electricity.
This relief recognises that environmental taxes unfairly burden energy-hungry industries competing globally.
You’ll need to pass the business level test, proving electricity costs hit 20% or more of your gross value added. If you qualify, you’ll join businesses across textiles, paper, ceramics, and glass sectors already leveraging this advantage.
The result? You stay competitive whilst contributing to the UK’s net-zero goals.
It’s genuine support designed for businesses like yours. Beyond the immediate savings, you can reclaim historical exemption benefits for previous periods where you met the eligibility criteria, potentially unlocking backdated relief on your energy costs. A comprehensive energy audit will identify exactly where your business stands against CCA eligibility thresholds and uncover additional efficiency opportunities. Our energy contract expertise can help you navigate the complexities of CCA applications and ensure you’re maximising all available relief opportunities.
Full Exemptions: Domestic Use, Charities, and Below-Threshold Businesses
You might qualify for complete Climate Change Levy exemptions if your business falls into specific categories: domestic properties, registered charities supporting non-commercial activities, or small businesses consuming energy below set thresholds.
Domestic use includes residential homes, student accommodation, and elderly care facilities, whilst charities engaged in education or conservation work receive full protection on qualifying supplies.
Small businesses escape the levy entirely when electricity stays below 12,000 kilowatt-hours annually or natural gas remains under 52,765 kilowatt-hours yearly.
Mixed-use properties benefit from a significant advantage: if 60% or more of your energy consumption is for domestic purposes, the entire property qualifies for exemption from the levy. Understanding your current energy consumption through bill validation can help determine whether you qualify for these exemptions and identify potential cost savings. Implementing real-time reporting systems enables you to monitor consumption patterns and maintain accurate records for exemption compliance.
Domestic And Charity Protections
Domestic And Charity Protections
Because the UK Climate Change Levy targets non-domestic energy use, certain groups receive complete protection from these charges.
Domestic properties and charities enjoy substantial safeguards under this scheme. Let’s walk through what qualifies:
Domestic settings form the foundation of these protections. Your home, flat, caravan, or holiday accommodation gets full exemption regardless of fuel type. Armed forces residential accommodation receives the same treatment, recognising their unique position.
Charity non-business activities extend relief to organisations serving the community. Charities providing a VAT certificate can claim relief on non-revenue activities, though their business operations remain taxable. This distinction ensures charities can pursue their missions without unnecessary burden whilst maintaining accountability for commercial ventures. To claim these exemptions, charities must complete the Government’s CCL supplier certificate (PP11) and submit it to the appropriate customer services contact. Organisations committed to verified social and environmental standards can demonstrate their accountability through transparent reporting of their exemption status.
Mixed-use premises introduce a threshold-based approach. When your property’s 60% or more qualifies for exemption, you’re entirely excluded from the levy. Should your qualifying use fall below this benchmark, the levy applies only to the non-qualifying portion of your energy consumption. By adopting renewable energy sources, mixed-use premises can further reduce their overall energy costs while contributing to environmental sustainability goals.
Demonstrating your eligibility requires appropriate documentation proving your status. This arrangement protects vulnerable populations and community organisations from energy levies, allowing them to direct resources towards their essential work rather than supplementary costs.
The structure recognises both who needs protection and how to apply it fairly across different circumstances.
Small Business Consumption Thresholds
Small businesses—those consuming modest amounts of energy—can escape the Climate Change Levy entirely through consumption-based exemptions.
You qualify for full CCL exemption if your daily electricity use stays below 33 kWh or your gas consumption remains under 145 kWh daily. If you prefer to think in monthly terms, electricity under 1,000 kWh or gas below 4,397 kWh monthly typically qualify you for both 5% VAT reduction and CCL exemption.
Looking at it annually, you’re classified as a small business if you consume less than 12,000 kWh of electricity or 52,765 kWh of gas.
Before you assume you’re exempt, verify your status directly with your energy supplier. The easiest way to check is by looking at your bill for a separate “Climate Change Levy” line item—if it’s not there, you’re likely already exempt. Our energy management consultancy can help you conduct a thorough audit of your consumption patterns to ensure accurate exemption status. Implementing customised energy efficiency solutions can further reduce your consumption and strengthen your exemption eligibility. Remember that CCL rates are currently set at 0.775 pence per kWh for both electricity and gas until 31 March 2026, so confirming your exemption status prevents unnecessary charges.
Taking the time to confirm your qualification now protects you from costly penalties down the line and ensures you’re actually receiving the relief you’re entitled to.
Non-Fuel Uses: CCL Exemptions for Industrial Processes
If you’re running a metallurgical or mineralogical business, you might qualify for significant CCL exemptions on the energy you use directly in production—think smelting operations, metal forging, glass manufacturing, or cement production.
You’ll need to prove your processes match specific NACE codes and submit the right documentation (Forms PP10 and PP11) to your energy supplier to claim these reliefs.
Getting this right can save your business tens of thousands annually, but accuracy in your application matters because HMRC takes compliance seriously.
Industrial Process Eligibility Criteria
Many UK businesses don’t realise they’re paying more in energy taxes than they should be. If you’re in manufacturing or industrial production, you might qualify for significant Climate Change Levy exemptions on non-fuel uses.
Your operation becomes eligible when it involves several key areas. Canteen operations, lighting, heating, and facilities that directly support your manufacturing process all qualify for exemptions. This extends to your equipment operations too—switch rooms, pumps, control systems, and generation startup activities fall within exempt categories when they’re linked to your production activities.
Surface treatment processes deserve particular attention. Metal coating, galvanising, and refining operations can claim up to 90% electricity exemptions under Climate Change Agreements, which represents substantial savings for businesses in these sectors.
To secure these exemptions, you’ll need to complete Form PP10 declarations confirming your qualifying uses. The accuracy of your documentation is crucial because it determines whether you capture every eligible saving your business deserves.
Metallurgical and Chemical Applications
Because you’re working in metallurgical or chemical manufacturing, you’ve got access to substantial Climate Change Levy exemptions that many businesses simply overlook. If you’re in basic metals manufacturing—smelting, casting, galvanising, or refining—you qualify for full CCL relief on qualifying energy. Metal forging, pressing, and surface treatment operations like electroplating and heat treatment also receive exemption status.
Chemical sectors benefit from separate non-fuel use exemptions that cover glass fibre manufacturing, fertiliser production, and chemical processes. High-temperature furnace and kiln operations in ceramics, glassmaking, and cement production qualify too.
The key requirement is ensuring your energy directly powers these qualifying processes. You’ll need fair, reasonable evidence mapping your energy consumption to prove this direct use. This means documenting everything thoroughly—from energy bills to production logs—so you can substantiate exactly where that power’s going. The better your records, the stronger your relief claims become, and the more you can recover in CCL savings.
Hydrogen and Specialty Chemicals: New Exemptions Arriving Spring 2026
Hydrogen and Specialty Chemicals: New Exemptions Arriving Spring 2026
Two significant Climate Change Levy (CCL) exemptions are coming your way in Spring 2026, and they’ll reshape how hydrogen producers and specialty chemical manufacturers handle their energy costs.
The government’s addressing a 25-year regulatory gap where these industries faced unfair charges. Let’s walk through what’s changing and why it matters for your business.
Electrolysis for hydrogen production takes centre stage as the first major shift.
Electricity used to produce low-carbon hydrogen becomes exempt, which directly enhances your competitiveness against traditional steam reformation methods.
This creates a genuine incentive to invest in cleaner technologies without the burden of additional energy levies.
Sodium bicarbonate production follows as the second exemption.
Natural gas used as a carbon dioxide source now qualifies for exemption under non-fuel use classification.
Rather than being taxed as an energy input, it’s reclassified for its actual purpose, removing an unnecessary financial pressure on manufacturers.
These changes don’t exist in isolation.
They’re part of a broader strategy to align with the UK’s 2030 clean power goal and 2050 net zero target.
By removing the levy burden on these specific processes, the government is actively encouraging the industries that will drive Britain’s clean energy transition.
From a practical standpoint, your compliance costs remain straightforward.
You’ll simply complete exemption claim forms with HMRC—no complex bureaucracy or ongoing administrative headaches.
This shift positions your business within the government’s developing clean energy environment whilst protecting your bottom line.
How to Claim CCL Exemptions and Relief
Now that you’ve got clarity on those Spring 2026 exemptions for hydrogen and specialty chemicals, the real work begins—actually claiming the reliefs you’re entitled to.
You’ll need to complete Form PP10, which estimates your usage across different relief categories. This calculation determines your overall relief percentage. Next, submit Form PP11 to your energy supplier, showing exactly what percentage relief you’re claiming.
The Environment Agency issues your CCA certificate after reviewing your eligibility forms. You’ll need this certificate to support your relief claim with HMRC.
Keep detailed records throughout—quality documentation proving your entitlement matters. When circumstances change or you switch suppliers, update both forms immediately and notify HMRC. Annual reviews make sure you’re staying compliant and maintaining your entitled relief amounts.
2026 CCL Rate Increases: What to Budget
Whilst you’ve successfully claimed your CCL exemptions, you’ll still need to budget for the rate increases coming in April 2026.
The Climate Change Levy is climbing across the board. Here’s what you’re facing:
- Electricity rising 3.4% – from 0.775 p/kWh to 0.801 p/kWh, costing you an extra £8.01 per megawatt hour
- Gas increasing similarly – matching electricity’s jump to 0.801 p/kWh with the same 3.3% bump
- Further hikes ahead – rates jump again in April 2027 to 0.00827 p/kWh for both commodities
The good news is that LPG users get some relief. Your rates stay frozen at 0.02175 £/kg with no increase on the horizon.
To navigate these changes effectively, start mapping your consumption patterns now.
Understanding how much energy you actually use each month puts you in control of your budgeting and helps you anticipate costs before they hit your accounts.
This approach means you won’t face any nasty surprises when the bills arrive.
