How to Claim a Climate Change Levy Exemption

The Climate Change Levy (CCL) is a tax on electricity, gas, and other solid fuels delivered to non-domestic users. It serves as an incentive for businesses and public sector organizations to increase their energy efficiency. Energy suppliers collect the levy on customer bills and pay it to HM Revenue and Customs (HMRC). While the CCL applies broadly, a framework of reliefs and exemptions exists for qualifying organizations.

Determining Eligibility for Full Exemption

A full exemption from the Climate Change Levy is available under specific circumstances, completely removing the charge from a business’s energy supply. These exemptions are not automatic and depend on the nature of the user, the quantity of energy consumed, or the specific use of the energy. Businesses must identify if their operations fall into a qualifying category to receive this relief.

Supplies for Domestic or Charitable Non-Business Use

An exemption applies to energy used for purposes classified as domestic or for the non-business activities of a charity. Domestic use extends beyond typical homes to include settings like self-catering holiday accommodations and caravans. For a charity to qualify, the energy must be consumed in the course of activities that are not commercial. An organization relying on donations rather than trading to fund its operations would meet this non-business criterion for its energy use.

De Minimis Supplies

Businesses that consume very small amounts of energy can benefit from the ‘de minimis’ exemption. This rule exempts any organization whose average daily consumption falls below a specific threshold. To qualify, a business must use less than 33 kilowatt-hours (kWh) of electricity and less than 145 kWh of gas per day.

Exempt Energy Sources and Processes

Certain industrial activities and energy sources are granted a full exemption. These include:

• Electricity generated from renewable sources, such as solar or wind.
• Energy used in high-efficiency combined heat and power (CHP) stations that meet Combined Heat and Power Quality Assurance (CHPQA) program criteria.
• Energy used in mineralogical processes, such as the manufacturing of glass, ceramics, and cement.
• Energy used in metallurgical processes, which cover the production of iron, steel, and other metals.

Securing Reduced Rates through Climate Change Agreements

Beyond a full exemption, businesses in energy-intensive sectors can secure a reduction in their CCL payments by entering into a Climate Change Agreement (CCA). A CCA is a voluntary arrangement between an industry sector and the Environment Agency, designed to encourage greater energy efficiency. This path provides a discount for participants who commit to and achieve specific energy reduction targets.

Eligibility for a CCA is targeted at businesses operating within energy-intensive industries, such as chemicals, paper, food and drink, and certain agricultural sectors like pig and poultry farming. These agreements are managed through sector associations, which negotiate overarching targets with the Environment Agency. Individual companies then agree to meet their portion of this target to maintain their eligibility for the reduced CCL rates.

In exchange for meeting these energy efficiency or carbon emission reduction goals, operators receive a discount on the main CCL rates. For the period running until March 31, 2026, participants in a CCA receive a 92% discount on electricity and an 89% discount on natural gas. The scheme requires regular monitoring and reporting of energy use against the agreed-upon targets to ensure continued qualification. The current CCA scheme has been extended to March 31, 2027, and a new scheme is planned to run from July 1, 2027, to March 31, 2033.

Required Documentation for Claiming Relief

Claiming relief from the Climate Change Levy, whether a full exemption or a reduced rate, requires the formal submission of specific documentation to an energy supplier. The process hinges on accurately completing and providing the correct forms, which serve as official declarations of eligibility.

Supplier Certificate (Form PP11)

The central document for most claims is the Supplier Certificate, known as Form PP11. This form is a declaration made by a business to its energy supplier, stating the grounds for its CCL relief claim. A separate PP11 must be completed and sent to each energy supplier for each type of fuel. The form requires information including the business’s name and address, VAT registration number, and the specific meter point or supply numbers.

The PP11 form requires the claimant to specify the exact relief being claimed. This could be a full exemption due to de minimis use or a reduced rate because the business is part of a Climate Change Agreement. If claiming a percentage-based relief, the specific percentage of the supply eligible for the discount must be stated on the form. The certificate is valid for five years, and a new form must be submitted to the energy supplier before the end of this period to ensure the relief continues.

Exemption Certificate (Form PP10)

For more complex exemptions, particularly those for mineralogical and metallurgical processes or for facilities in a CCA, an additional form is often necessary. The PP10 form, “Climate Change Levy Relief supporting analysis,” is used to calculate the precise percentage of energy eligible for relief. This form requires a detailed breakdown of energy usage, separating the qualifying use from the non-qualifying use. The final percentage calculated on the PP10 is the figure that the business then transcribes onto the PP11 form. Both the PP10 and PP11 forms can be downloaded from the GOV.UK website.

The Submission Process

Once eligibility has been confirmed and all the necessary documentation has been accurately prepared, the final step is to formally submit the claim. This involves communicating the claim to the correct party and subsequently verifying its application.

The completed forms must be sent to the appropriate destination. The PP11 Supplier Certificate should be sent directly to the business’s energy supplier, not to HMRC. For claims requiring a PP10 supporting analysis, that form is submitted separately to HMRC. The supplier is required to have the PP11 on file before they can apply any relief to an account.

After submitting the PP11 form to the energy supplier, the supplier will review and verify the information provided. Once validated, they will apply the corresponding CCL exemption or reduced rate to the business’s account. This change should be reflected on subsequent energy bills. Businesses should check their next few bills to confirm that the relief has been applied correctly. It is also a compliance requirement to maintain records of the claim, including copies of the submitted forms.