Climate Change Levy Amendment Regulations 2026

UK New Legislation

Published March 12th, 2026

Detected March 12th, 2026

Summary

The UK Treasury has issued the Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026, amending the 2005 Regulations. These amendments specify hydrogen production via electrolysis and natural gas use in sodium bicarbonate production as non-fuel uses, thereby exempting them from Climate Change Levy charges.

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What changed

The UK Treasury has amended the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005 via the Climate Change Levy Amendment Regulations 2026. The amendments, effective March 12, 2026, specify that electricity used in electrolysis for hydrogen production and natural gas used as a source of carbon dioxide in the production of sodium bicarbonate from soda ash are to be considered non-fuel uses. Consequently, these specific uses will be exempt from Climate Change Levy charges.

Regulated entities involved in the production of hydrogen via electrolysis or the use of natural gas in the manufacturing of sodium bicarbonate should review these amendments to ensure accurate application of Climate Change Levy exemptions. Compliance officers should update internal tax reporting and accounting procedures to reflect these changes, which take effect immediately upon the regulations' commencement date.

What to do next

Review amendments to the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005.
Update internal tax reporting and accounting procedures to reflect exemptions for hydrogen production and specific natural gas uses.
Ensure accurate application of Climate Change Levy charges based on the new non-fuel use specifications.

Source document (simplified)

Status:

This is the original version (as it was originally made). This item of legislation is currently only available in its original format.

Statutory Instruments

2026 No. 280

CLIMATE CHANGE LEVY

The Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026

Made

11th March 2026

Coming into force

12th March 2026

The Treasury make these Regulations in exercise of the powers conferred by paragraph 18(2) and (3) of Schedule 6 to the Finance Act 2000(1).

In accordance with paragraph 146(3) of Schedule 6 to that Act, a draft of the instrument was laid before, and approved by a resolution of, the House of Commons.

Citation and commencement

—(1) These Regulations may be cited as the Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026.

(2) These Regulations come into force on the day after the day on which they are made.

Amendment of the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005

—(1) The Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005(2) are amended as follows.

(2) In Schedule 1 (uses otherwise than as fuel)—

(a) In Part A (wholly non-fuel uses), at the end of the list in paragraph 1, after “Advanced chemicals from other more basic chemicals” insert the following entry—

“ Hydrogen ”; (b) In Part B (mixed uses), after paragraph 31 insert—

“ 31A. Natural gas as a source of carbon dioxide to produce sodium bicarbonate from soda ash ”.

Taiwo Owatemi

Stephen Morgan

Two of the Lords Commissioners of His Majesty's Treasury

11th March 2026

Explanatory Note

(This note is not part of the Regulations)

Climate change levy is charged on supplies of electricity, gas and solid fuels that are not for domestic or charity use. Supplies for non-fuel use are exempt.

These Regulations amend Parts A and B of Schedule 1 to the Climate Change Levy (Fuel Use and Recycling Processes) Regulations 2005 (S.I. 2005/1715) in order that electricity used in electrolysis for the production of hydrogen, and natural gas used partly as fuel and partly as a source of carbon dioxide in the production of sodium bicarbonate from soda ash, are specified as non-fuel uses.

A Tax Information and Impact Note covering this instrument will be published on the HMRC website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.

(1) 2000 c. 17.

(2) S.I. 2005/1715, amended by section 99 of, and paragraph 9 of Schedule 20 to, the Finance Act 2014 (c. 26), and S.I. 2014/844; there are other amending instruments but none is relevant.