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HM Revenue and Customs Brief 06/11


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Issued 2nd Febuary 2011 HMRC

Climate Change Levy (CCL): introduction of a lower rate of CCL for supplies of natural gas in Northern Ireland


CCL legislation will be amended from 1 April 2011 to reflect a change in treatment for the purpose of the levy for supplies of natural gas in Northern Ireland.

The purpose of this brief is to announce the introduction of a lower rate of CCL on supplies of natural gas in Northern Ireland from 1 April 2011; and to announce that the draft legislation amending the appropriate paragraphs of Schedule 6 to the Finance Act 2000 is being exposed. It also provides an explanation of the change.

Who needs to read this?

  • Suppliers of natural gas in Northern Ireland that are currently registered, or as a result of the change will become required to register, with HM Revenue & Customs (HMRC) for the CCL. Such suppliers are responsible, or will become responsible, for accounting for the levy to HMRC.
  • Business and public sector consumers of gas in Northern Ireland who will have to pay the levy on their energy bills.

Domestic consumers of gas do not pay CCL and are not affected by the change.


The key changes are outlined below. The draft legislation; Explanatory Note and Tax Information and Impact Note are available on the HM Treasury website (PDF 202K) (Opens new window).

The current full exemption from CCL for supplies of natural gas in Northern Ireland was introduced to encourage a switch to gas from more polluting energy sources such as coal and oil, and to support the expansion of the fledgling gas distribution network in Northern Ireland.

The exemption is a state aid (approved under the Community guidelines on state aid for environmental protection) with an approval that is due to expire on 31 March 2011.

Why is the exemption being replaced with a lower rate of CCL?

The exemption is permitted by derogation from Directive 2003/96, which sets a framework for the way in which all EU Member States tax energy products. The derogation from the Directive expires on 31 October 2013.

The derogation makes it clear that total or partial exemptions or reductions for natural gas were intended to be temporary. 31 months is the maximum period for which the UK is able to secure further state aid clearance for a relief from levy in Northern Ireland after the current state aid approval expires on 31 March 2011. Following consultation with the Commission, the Government has concluded that it is unlikely that a full exemption would be re-approved under the current Community guidelines on State Aid for Environmental Protection issued in 2008, which differ significantly from the guidelines under which this exemption has previously been approved.

The Government has therefore decided not to seek a further period of state aid approval for the exemption. However, in recognition of the environmental, economic and social benefits that a gas supply infrastructure brings to Northern Ireland, it therefore plans to introduce a lower rate of CCL on supplies of gas in Northern Ireland. Although a lower rate of tax is still a state aid, provided it is set at least at the minimum rate for gas prescribed by Directive 2003/96, the UK is permitted to use a simplified clearance process for the state aid.

How much will the lower rate be?

This lower rate of CCL will be set at 0.00059 per kilowatt hour, which is 65 per cent lower than the full rate of CCL on gas.


The change in treatment will have effect in relation to supplies of gas made or treated as being made on or after 1 April 2011 but before 1 November 2013. Supplies made or treated as being made on or after 1 November 2013 will be subject to the full rate of CCL on gas.

Can any other CCL reliefs apply to supplies of natural gas in Northern Ireland?

Yes. CCL exempt supplies include gas used for electricity production, or gas used as input fuel to a combined heat and power station (CHP) for example.

However, businesses in Northern Ireland in the Climate Change Agreement (CCA) scheme will not be able to claim the CCA discount on their gas supplies between 1 April 2011 and 31 October 2013. This is because claiming a discount on gas under both the CCA scheme and the new lower rate would mean the business would be paying less than the minimum rate of tax on gas set out in Directive 2003/96, invalidating the UK's state aid clearance for both relief schemes.

Details of the current CCL reliefs, and how they are claimed, can be found in Notice CCL 1/3 Reliefs and special treatments for taxable supplies available.

Alternatively, you can contact the Excise and Customs Helpline.

Further information

Further information can be obtained by contacting the Excise and Customs Helpline on Tel 0845 010 9000.

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Article Published/Sorted/Amended on Scopulus 2011-02-08 13:40:52 in Tax Articles

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