Climate Change Tax – Business Energy – Forbes Advisor UK

The Climate Change Tax (CCL) is one of many environmental tax and relief programs put in place to encourage businesses to operate in a more environmentally friendly manner.

Here’s everything you need to know about how the CDC works and how your business may be able to afford a reduced rate.

What is the climate change tax?

The climate change tax was introduced in April 2001 to encourage business customers in the industrial, commercial, agricultural and utility sectors to be more energy efficient in their operations and to reduce their carbon emissions.

The CDC is levied on taxable products for the purposes of heating, lighting and electricity, such as natural gas, electricity, petroleum and coal. It is not charged for road fuel and other oils already subject to excise duty.

CCL is paid either at the prime rate or at the Carbon Price Support (CPS) rate, as shown below:

  • Main tariff All companies in the industrial, commercial, agricultural and utility sectors will be billed CCL at the main rate on electricity, gas and solid fuels (such as coal).
  • Carbon price support rate You will pay this tariff if you own power plants or if you operate cogeneration plants. Note, however, if you are generating your own power and making money through the feed-in tariff, you are unlikely to have to pay the tax as you will be classified as a small generator.

How much does the climate change tax cost?

As of April 1, 2020, the main levy was 0.811 pence per kWh (kilowatt hour) for electricity and 0.406 pence per kWh for gas. On April 1, 2021, the tariff will drop to 0.775 pence per kWh for electricity and drop to 0.465 pence per kWh for gas.

Indeed, electricity is considered a source of energy “greener” than gas, because it can be produced from from renewable sources, like wind and solar.

Your energy supplier will calculate the CCL and automatically add it to your bill where it will be listed as a separate item. Once it has been collected, the charge will be forwarded to HMRC.

Compare Business Gas & Electricity

Save up to £ 955 * on average on your business energy bills. Call 020 8054 4521 for assistance.

Do all businesses have to pay the CDC?

Certain businesses may be exempt from paying the main CCL rate, such as:

  • businesses that use small amounts (de minimis levels) of energy
  • household energy users, e.g. homes, schools, self-catering holiday homes and caravans
  • charities carrying out non-commercial activities.

How can my business pay a reduced rate on CCL?

If your business is not exempt, you may be able to reduce the amount you pay by making your business more energy efficient. The most effective way to do this is to sign a Climate Change Agreement (CCA) which can give you a discount of up to 90% off the CCL rate paid on utility bills and a 65% reduction. on all other fuels.

In return, you must improve the energy efficiency of your business and reduce your average energy consumption.

By signing a CCA, you agree to measure and report your company’s energy use and carbon emissions against agreed targets over four two-year target periods. If, after each period, your company has achieved its objectives, you can stay in the system and benefit from the CCL discount.

How can I make my business more energy efficient?

There are several steps you can take to help your business become more energy efficient, many of which are relatively straightforward. By implementing these measures, not only will you reduce your company’s carbon footprint, but you will also save money.

Turn off office equipment

Office equipment such as laptops, printers, and copiers can be essential for your business, but they also consume a lot of energy. Make sure the equipment is turned off overnight and activate power saving features to ensure that the equipment turns off automatically when not in use.

Changing the bulbs

Installing energy efficient light bulbs is a quick but effective way to reduce the amount of energy your business uses. LED lighting uses 75% less electricity than equivalent incandescent lighting and produces little carbon dioxide.

Install light sensors

Installing sensors that turn the lights on when someone enters the room and turn them off when no activity is detected for a certain period of time will also reduce energy waste by around 30%.

Adjust the thermostat

Lowering the thermostat one degree can make a big difference to energy bills. Around 16 degrees is considered better for warehouses and 20 degrees for offices. You might want to choose a different setting, of course, but it’s best not to just pick a random number and assume it’s right. Many companies involve their staff in determining the right ambient temperature for their workplace.

Install a smart meter

A smart meter will show you where your business uses most of its energy and therefore where you need to reduce it.

Think about insulation

Make sure hot water tanks, boilers and pipes are well insulated and that you have stopped drafts around the building. You might even consider investing in cavity wall insulation if it isn’t already in place.

Compare Business Gas & Electricity

Save up to £ 955 * on average on your business energy bills. Call 020 8054 4521 for assistance.

Source link

About Sally Dominguez

Check Also

In China, your credit may depend on how often you visit your parents

Few Chinese citizens have credit cards or a credit history. But the country has started …

Leave a Reply

Your email address will not be published. Required fields are marked *