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Climate Change Levy: What does it mean for businesses?

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The threat of global warming is one that hits the headlines on an almost daily basis. So it comes as no surprise that the UK has some pretty ambitious targets to reach when it comes to our carbon emissions. 

Following the establishment of the Climate Change Act in 2008, which set out the world’s first legally-binding climate change targets when it was originally introduced, the UK must cut its greenhouse gas output by 80 per cent (using figures from 1990) by the year 2050.

Given these high targets, it’s not surprising that everyone is being encouraged to get involved with cutting their carbon footprint. 

We have seen a surge of measures and motivations, from LED lightbulbs and more efficient appliances to solar panels and government tariff switching schemes, all of which have been designed to encourage people and businesses across the UK to improve their energy efficiency, including the Climate Change Levy.

What is the Climate Change Levy?

The Climate Change Levy was introduced as a tax on energy that was applied to non-domestic consumers as an incentive for businesses to become more efficient with their energy use. 

Working to reduce carbon dioxide emissions by using energy that is generated by low CO2 or renewable sources, such as solar and wind, would make businesses exempt from the Levy charges, whereas those whose energy came from fossil fuels would have to pay the additional tax on their gas and electricity.

However, during the Emergency Budget on July 8, Chancellor of the Exchequer George Osborne announced that the Climate Change Levy would be changed: “We will remove the outdated Climate Change Levy exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad.”

What does this mean for businesses?

Naturally an announcement such as this caused outrage from green campaigners and organisations, many of whom believe that the removal compromises the whole meaning behind the Climate Change Levy. 

There have also been worries that without the added enticement of a tax break, businesses may lose interest in cutting back on their carbon footprint. Many may wonder why they should go through the effort of finding renewable sources of energy just to pay the same amount for their energy as those who use fossil fuels.

For those businesses that have strived to make themselves greener in order to do their bit for the environment and cut their own expenses, the news of the removal of the Climate Change Levy exemption may have been somewhat unwelcome. 

But all is not lost. Despite the eradication of this all important tax exemption, there is still plenty that businesses can do, on top of using energy from renewable sources, to reduce their impact on the environment and cut their own expenses at the same time.

Continue reading on the next page to discover what you need to do…

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