What the Climate Change Levy is
CCL is a tax on energy supplied to businesses. Your supplier charges it on your bill and pays it to HMRC. GOV.UK says you pay the main rates if your business is in the industrial, commercial, agricultural or public services sectors, and that you do not pay them as a domestic user, a charity engaged in non-commercial activities or a business that uses small amounts of energy (GOV.UK).
There is a second part, the Carbon Price Support rate, paid by owners of power stations and combined heat and power plant on the fuel they burn; a business buying electricity doesn't pay it directly (HMRC rates).
Current rates
| Commodity | From 1 April 2025 | From 1 April 2026 | From 1 April 2027 |
|---|---|---|---|
| Electricity (£ per kWh) | 0.00775 | 0.00801 | 0.00827 |
| Gas (£ per kWh) | 0.00775 | 0.00801 | 0.00827 |
| LPG (£ per kg) | 0.02175 | 0.02175 | 0.02175 |
| Other taxable commodities (£ per kg) | 0.06064 | 0.06264 | 0.06468 |
Source: HMRC, Climate Change Levy rates. Businesses with a Climate Change Agreement pay a reduced rate: HMRC's table gives a 92% discount on electricity and 89% on gas from April 2026.
Example only
What the levy adds to a bill
- A business buying 100,000 kWh of electricity a year from April 2026
- 100,000 × £0.00801 = £801 of Climate Change Levy
- If solar supplies 30,000 kWh of that on site, the levy falls by 30,000 × £0.00801 = £240.30 a year
Example only. The levy is a small part of the saving: the bigger part is the price of the electricity you no longer buy.
See how much of your electricity solar could supply on site: book a free site survey.
Book a free site surveyDoes self-generated solar avoid it?
Yes, for electricity you generate and use yourself. HMRC's Excise Notice CCL1/3 says: "Where you are an auto-generator or exempt unlicenced supplier, there is no requirement to account for CCL on self or direct supplies of renewable source electricity" (CCL1/3, 3.12). The same notice describes an auto-generator as someone who generates electricity primarily for their own use.
- Solar you use on site. Not bought from a supplier, so no levy on it
- Electricity you still buy. Your supplier charges CCL on it as before
- Direct PPA supplies. HMRC says direct supplies from a renewable generator to a customer, with no intermediary taking ownership of the electricity, are not liable
- Renewable electricity from a utility or third party. A taxable supply: a green tariff does not remove CCL
That last point matters when comparing options: buying a green tariff changes where your supplier sources power, not whether you pay the levy. See renewable energy for business and solar PPAs.
Climate Change Agreements
Energy-intensive businesses can enter a Climate Change Agreement with the Environment Agency through their sector association, commit to energy or carbon targets, and pay the reduced rate of CCL. The 2026 statutory guidance says the Administrator runs the new scheme through to 31 March 2033, with Target Period 7 covering 1 January to 31 December 2026 (GOV.UK). If you already have one, solar that cuts what you buy still reduces your bill and helps meet the targets. Your sector association can confirm how on-site generation is counted.
Sources
HMRC's CCL rates page (last updated 27 November 2025), GOV.UK's CCL overview, Excise Notice CCL1/3 and the 2026 CCA statutory guidance were read on 2 November 2026.
- GOV.UK: Climate Change Levy rates (HMRC, last updated 27 November 2025)
- GOV.UK: Climate Change Levy, who pays and exemptions
- HMRC Excise Notice CCL1/3: reliefs and special treatments (3.12, renewable self-supplies)
- GOV.UK: Climate Change Agreements statutory guidance 2026
General information from HMRC and GOV.UK, not tax advice.