Chancellor George Osborne  has announced that the government would remove the Climate Change Levy (CCL) exemption for renewable electricity schemes.

The CCL is a UK-wide tax on the supply of energy to businesses and the public sector. Renewable source electricity (RSE) is currently exempt from the levy.

Delivering his Emergency Budget, Osborne said the change would “correct an imbalance in the tax system by preventing taxpayers’ money benefitting renewable electricity generated overseas”. A transitional period will begin on 1 August, from when suppliers will still be able to exempt renewable electricity from the CCL if they hold sufficient Levy Exemption Certificates and use them against supplies made to eligible customers. The length of the transition period will be consulted on over the coming months.

Costings suggested that the move would earn the Treasury £450mn in 2015-16, and that this would rise to £910mn in 2020-21.

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