CCL is provided for by the Finance Act (FA) 2000. The main rates are set out in paragraph 42(1) of Schedule 6 to the Act.
Paragraph 42(1) (ba) and (c) of Schedule 6 to FA 2000 provide that, for supplies of electricity only, 10% of the main rate is payable where a supply is a reduced-rated supply. For supplies of other taxable commodities, 35% of the main rate is payable where a supply is a reduced-rated supply.
Paragraph 2 of Schedule 1 to the Climate Change Levy (General) Regulations 2001 (SI 2001/838) (‘the Regulations’) sets out the formula used by businesses in the Climate Change Agreement (“CCA”) scheme to calculate their CCL relief entitlement, including the reduced rate.
Legislation will be introduced in Finance Bill 2016 to amend the CCL main rates and the reduced rates in paragraph 42 of Schedule 6 to FA 2000.
Business and public sector users of energy, gas and electricity utilities and suppliers of solid fuels and liquefied petroleum gas (LPG) will be affected by the increases.
The changes will have effect for supplies of taxable commodities treated as taking place on and after 1 April 2017 (2017 to 2018), 1 April 2018 (2018 to 2019) and 1 April 2019 (2019 to 2020).
CCL main rates for 2017 to 2018 and 2018 to 2019 will be increased in line with RPI.
For 2019 to 2020, the balance between rates on taxable commodities will be updated to reflect changes in the fuel mix used in electricity generation. The increase in main rates of CCL will recover the tax revenues lost by closing the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.
The reduced rates of CCL for qualifying businesses in the CCA scheme will be amended so participants will not pay more in CCL than they would under the currently expected Retail Prices Index (RPI) increase for that year.