Climate Change Levy UK 2027/28 — Business Energy Rates

The Climate Change Levy (CCL) is a UK environmental tax included on many non-domestic energy bills. From 1 April 2027, the published main rates are £0.00827 per kWh for electricity and gas, £0.02175 per kilogram for LPG, and £0.06468 per kilogram for other taxable commodities such as solid fuels.

CCL is not normally charged on taxable commodities supplied to domestic consumers or charities for non-business use. For businesses, the energy supplier usually charges and accounts for the levy, so the rate may appear as part of the energy bill rather than as a separate payment made directly by the business.

The UK Tax Changes 2027/28 guide covers the wider Budget measures. This page focuses on CCL, reduced-rate treatment, exemptions and the distinction between CCL and Carbon Price Support.

CCL main rates from 1 April 2027

The rates are small per unit but can become material for a business with high electricity, gas or solid-fuel consumption. A supplier normally applies the correct charge to the relevant supply and shows the levy within the commercial energy billing arrangement.

Simple consumption illustrations

These examples calculate the main levy only and exclude VAT, energy prices, standing charges, supplier margins, exemptions and reduced-rate treatment:

These are arithmetic illustrations, not a business's final bill. Confirm the taxable unit, supply classification and any exemption or reduced-rate certificate with the energy supplier.

Who normally pays CCL?

CCL is designed primarily for business and public-service energy use. It can affect industrial, commercial, agricultural and public-service organisations. The supplier generally collects the levy from the customer and accounts for it to HMRC.

The levy does not apply in the same way to every energy customer. HMRC lists exemptions and special treatment for supplies such as:

• domestic use;
• non-commercial charitable use;
• certain supplies used outside the UK;
• qualifying combined heat and power arrangements;
• electricity generated from qualifying renewable sources under the relevant rules; and
• certain transport or electricity-generation uses.

The wording and evidence requirements matter. A business should not remove CCL from an invoice merely because it is a charity, uses renewable electricity, or operates a generator without checking the exact exemption and supplier process.

Reduced rates and Climate Change Agreements

An energy-intensive business may be able to obtain a reduced CCL rate when it is covered by a qualifying Climate Change Agreement (CCA). The CCA scheme links the reduction to energy-efficiency or emissions targets and the business's eligible sector and facilities.

The published reduced-rate percentages from 1 April 2027 are:

For example, if the electricity main rate is £0.00827 per kWh and the business qualifies for the published 92% reduction, the remaining levy before any other supply-specific issue is 8% of £0.00827, or £0.0006616 per kWh. The supplier may round the invoice amount, so do not expect every bill to display that many decimal places.

A CCA is not a generic discount that any business can select at checkout. Check the Environment Agency scheme rules, qualifying sector, target period, certificate and supplier evidence requirements before budgeting on a reduced rate.

CCL versus Carbon Price Support

CCL has two related but different components:

The CPS rate is not a second charge that every business should add to its electricity bill. A business that simply buys electricity should not use the CPS table as its CCL rate. Generation and CHP operators need to check the separate CPS rules and reporting obligations.

How to check a business energy bill

1. Identify whether the supply is domestic, non-domestic, charitable or a special exempt use.
2. Check the unit: electricity and gas are measured in kWh, while LPG and other taxable commodities use kilograms.
3. Compare the invoice rate with the HMRC table for the date the supply is treated as taking place.
4. Check whether the business has a valid CCA or other exemption evidence accepted by the supplier.
5. Keep meter readings, supply contracts, certificates and correspondence with the supplier.

CCL can be a pass-through item on a business energy bill, but an invoice dispute is not automatically an HMRC dispute. Start with the energy supplier when the calculation, meter unit or exemption has been applied incorrectly.

CCA eligibility and evidence in 2027/28

A Climate Change Agreement is a voluntary scheme for eligible energy-intensive industrial facilities. The 2026 statutory guidance says the facility must carry out an eligible activity, be covered by the relevant agreement and continue to meet the scheme conditions. It also describes a 70% rule: at least 70% of the reckonable energy supplied to the facility must be intended for use in the eligible installation or installations on the site. Energy used in UK ETS activities is included when assessing the rule, although it is treated separately for CCA targets.

The 70% test is a facility-level test, not a statement that every business in an energy-intensive sector qualifies. Where the operator cannot evidence the previous 12 months, the administrator may assess intended use over the following 12 months. If the operator estimates that less than 70% of reckonable energy is used in the installation, permanent sub-metering may be required. A mixed site should therefore map the facility boundary, meters, eligible processes and non-eligible activities before budgeting on a reduced rate.

CCA eligibility must be maintained. The statutory guidance says operators confirm continued eligibility through the Performance Report, and audits may test eligible and non-eligible energy use and whether the facility still carries out an eligible process. A structural or operational change can trigger reassessment. Keep the agreement, facility description, sector association records, meter data, base-year evidence, performance reports and supplier certificate together. Do not continue applying a reduced rate after a facility becomes ineligible without checking the effective date and HMRC consequences.

The current CCA scheme includes target periods covering 2026, 2027–2028 and 2029–2030. That timetable is not the same as the CCL billing period: a CCA target period describes performance under the agreement, while the supplier applies the CCL rate to the relevant energy supply. Keep the energy bill reconciliation separate from the CCA performance calculation.

Mixed-use sites, generators and public bodies

Mixed-use premises require a supply-by-supply review. A site can contain domestic accommodation, charitable activities, commercial operations, a generator and manufacturing processes. The customer should identify which meter and use relate to each treatment, rather than asking the supplier to remove CCL from the entire account based on the site's broad description. For a charity, HMRC's wording concerns non-business use; charitable status alone does not answer the use test.

Generators and qualifying combined heat and power operators need to separate the main levy from Carbon Price Support. HMRC says electricity generators account for and charge the correct CPS rate on specified fuels, while energy suppliers charge the main levy to customers. A company that buys electricity for its office is not normally the person that should add the CPS rate to that electricity bill. A business that operates generating stations must review fuel meters, thresholds, return records and the CPS table separately.

Forecasting the 2027/28 cost

To forecast CCL, use the expected taxable quantity, the rate applying from the relevant date and the percentage reduction only where the certificate or exemption is valid. For 100,000 kWh of electricity, the published main-rate arithmetic is £827.00 before VAT, a reduced-rate adjustment or any other supply issue. If a qualifying 92% CCA discount applies, the remaining CCL is 8% of that figure, or £66.16 before rounding. This is an illustration of the rate calculation, not a promise that the supplier will apply the reduction without evidence.

Forecasts should show separate lines for energy quantity, main CCL, CCA reduction, VAT, supplier charges and Carbon Price Support where relevant. Use meter data rather than an annual budget alone and model a change in operating hours or fuel mix. If the business expects to change supplier or move premises, confirm how the CCA certificate and exemption information will be transferred before the first bill under the new contract.

Common mistakes

1. Applying CCL to a normal household bill — the levy is principally a non-domestic energy charge.
2. Using pence when the table says pounds — £0.00827 per kWh is 0.827 pence per kWh.
3. Using the wrong unit — LPG and other taxable commodities are charged per kilogram, not per kWh.
4. Assuming every green-energy business is exempt — renewable, CHP and generation exemptions have specific conditions.
5. Treating a CCA discount as automatic — eligibility and supplier evidence are required.
6. Adding Carbon Price Support to every energy bill — CPS mainly concerns specified electricity-generation and CHP operations.
7. Comparing a 2026 bill with the 2027 rate without checking the supply date — the applicable rate follows the relevant period and HMRC rules.

Frequently Asked Questions

For the wider 2027/28 tax calendar, read the UK Tax Changes 2027/28 guide. Use the current HMRC Climate Change Levy rates and supplier documentation before changing a business forecast or energy contract.

Official sources

• HMRC: Climate Change Levy rates
• HMRC: Environmental taxes and Climate Change Levy
• HMRC: Budget 2025 overview of tax legislation and rates
• UK Parliament: Finance Act 2026
• Environment Agency: Climate Change Agreements statutory guidance 2026