The main rate of Climate Change Levy (CCL) on gas rose on 1 April 2024 to meet the frozen electricity rate, with the main rate for solid fuels increased proportionally to gas, under a change set out in the 2023 Budget1. The main rate on LPG continued to be frozen in 2024-251. The measure fulfils a commitment made in Budget 2016 to equalise the main rates of CCL on electricity and gas in pounds per kilowatt hour by 20251.
The CCL is a levy on the non-domestic use of energy, and the rates above are the main rates that apply to business and public sector users rather than to domestic energy bills. The change was announced alongside a two-year extension of the Climate Change Agreement scheme, under which participants who meet agreed energy efficiency targets are entitled to reduced rates of Climate Change Levy in 2025-26 and 2026-271. The support offered over the course of that extension is expected to be worth approximately £600 million, and the current scheme had been due to finish in March 20251.
"From 1 April 2024, the Government will increase the main rate of Climate Change Levy (CCL) for gas to meet the frozen electricity rate, with the main rate for solid fuels being increased proportionally to gas."
| Fuel | Main CCL rate treatment from 1 April 2024 |
|---|---|
| Solid fuels | Raised proportionally to gas |
| LPG | Frozen in 2024-25 |
The same Budget set out a call for evidence on the VAT relief for energy saving materials, seeking views on two potential areas of reform: including electrical battery storage within the relief, and extending it to energy saving materials installed in charitable buildings, where at present the relief applies only to domestic and residential accommodation1. The government also said it was assessing whether the list of qualifying materials, largely unchanged since 2006 apart from wind and water turbines, was up to date1. The call for evidence closed on 31 May 20231. Once enacted, the Windsor Framework was to expand VAT relief for the installation of energy saving materials in residential accommodation to Northern Ireland1.
Why it matters for households
The CCL is not charged directly on domestic electricity and gas bills, so this rate change does not alter the levy line on a household bill. Its relevance to a home's energy independence is indirect. Levies of this kind sit among the policy costs and levies on energy bills that shape what a supplier charges, and the equalisation of gas and electricity rates narrows the gap in how the two fuels are treated for non-domestic users. For a household weighing a heat pump or other switch away from gas, the relative treatment of gas and electricity in tax and levy terms is part of the wider cost picture, alongside wholesale gas and electricity prices and the unit rates charged by region. The VAT relief changes under discussion concern the upfront cost of installing qualifying energy saving materials, which bears on the payback period of measures that reduce a home's reliance on bought-in energy.
What happens next
The CCL rate change took effect on 1 April 20241. The Climate Change Agreement scheme extension runs to the end of 2026-27, with reduced levy rates for participants meeting energy efficiency targets in 2025-26 and 2026-271. The government has not reported the outcome of the VAT relief call for evidence that closed on 31 May 20231.