When it comes to planning ahead for your business’s energy needs, it’s helpful to know where you stand – especially as government policies around energy and emissions targets continue to shift. For LPG-powered businesses, the good news is that while there’s a clear push toward decarbonisation, there are still many ways LPG remains relevant – and increasingly supported – in the UK’s wider energy mix.
Whether you’re running an off-grid hospitality venue, managing a fleet of forklift trucks, or operating a rural holiday park, recent announcements include several positive developments, particularly in terms of tax relief, pricing stability, and futureproofing with renewable liquid gas alternatives.
Let’s take a look at four of the most important updates and what they mean for LPG users.
1. Climate Change Levy (CCL) – A Welcome Freeze for LPG
As confirmed in the Autumn 2024 Budget, the Climate Change Levy (CCL) rate for LPG will remain frozen. While other fuels like electricity, natural gas and coal are set to increase with inflation from April 2026, LPG will hold its rate – offering valuable price stability for off-grid businesses.
Also, if your business has a Climate Change Agreement (CCA) in place – a voluntary commitment to reduce energy use and emissions – you’ll continue to benefit from a 77% discount on your CCL rate for LPG. That’s a significant saving, particularly for energy-intensive operations.
But there’s more: a new CCA scheme is launching soon. From January 1, 2026, the new scheme will offer reduced CCL rates through to March 2033. Businesses already in the scheme will need to reconfirm eligibility - there’s no automatic rollover. And if you're new to CCAs, applications for eligible sectors are expected to open in Summer 2025.
Learn more about Climate Change Agreements.
What this means for you:
LPG already holds a strong position as a reliable, lower-carbon off-grid energy source. This freeze on the CCL rate only strengthens that advantage, providing important cost certainty at a time when many energy prices are rising. For businesses operating off the grid, from rural manufacturing to hospitality and food production, this stability is a powerful tool for budgeting and long-term planning.
Moreover, the continuation of the 77% discount through the CCA scheme makes LPG an even more cost-effective choice for energy-intensive industries. By maintaining this financial incentive under the new scheme through to 2033, the government is reinforcing LPG’s role as a competitive and sustainable fuel option.
If you’re already using LPG, this is a clear signal that you’re aligned with future-friendly energy policy. And if you’re not yet part of a CCA, the upcoming new scheme offers a valuable opportunity to reduce your energy costs while supporting your sustainability goals.
2. Fuel Duties: Holding Firm Until 2032
Another welcome update is the government’s decision to freeze fuel duties on road fuel gases – including LPG – until at least 2032. This announcement, alongside the continuation of the 5p per litre duty cut on petrol and diesel through to March 2026, offers rare long-term clarity in an area that’s often subject to change.
What this means for you:
If you use LPG to power your business vehicles - whether that’s delivery vans, forklifts or specialist machinery - this duty freeze is a real bonus. LPG’s road fuel duty currently sits at around 28.88p per kg, and knowing that this won’t rise anytime soon lets you better forecast transport and logistics costs.
This kind of price predictability is a big deal, especially for businesses operating on tight margins or in sectors where fuel is a major overhead. It also reinforces LPG’s reputation as not just a cleaner alternative to diesel, but an economically sound one too - something that’s increasingly important as businesses try to juggle sustainability with cost control.
3. VAT on Business Energy: A Boost for Smaller Users
The VAT rules on business energy remain largely unchanged – with the standard rate holding at 20%, but there are a couple of important things to note. From April 2024, the VAT registration threshold increased to £90,000, giving smaller businesses a little more headroom before needing to register.
And if you’re a low energy user – consuming less than 145 kWh of gas per day (equivalent to 4,397 kWh per month) – you may be eligible for the reduced 5% VAT rate on your LPG
What this means for you:
For smaller businesses this is a quiet but meaningful win. The higher VAT threshold means you may be able to delay or avoid registration altogether, which reduces your admin and keeps more money in your pocket. And if your energy use is relatively modest, that 5% VAT rate can really help soften the blow of winter heating bills.
It’s not always obvious whether you qualify, so it’s worth checking your consumption – your LPG supplier may be able to help you work it out.
4. Navigating Net Zero: LPG's Role
You’ll have seen a lot of headlines about heat pumps and electrification. And while these technologies have their place, they’re not the right solution for every business - especially for those located off the mains gas grid, or with specific, high-heat needs that can’t easily be met by electricity alone.
The Boiler Upgrade Scheme (BUS), for instance, offers grants for replacing fossil fuel heating systems with low-carbon alternatives, but doesn’t cover new LPG installations. This reflects a broader decarbonisation drive, yet the government has recently provided important clarity for off-grid properties. Its proposed ban on fossil fuel boilers for off-grid homes has been pushed back from 2026 to 2035, and it's been clarified that this is a target to phase out 80% of installations – not an outright ban.
What this means for you:
This crucial flexibility means you’re not under pressure to rip out your existing heating system or rush into costly upgrades. If LPG is what works for your business due to heat levels, rural location, or supply reliability, you can continue using it with confidence.
Critically, for businesses aiming to meet sustainability goals, renewable alternatives to LPG are already available. BioLPG, for instance, is chemically identical to conventional LPG but made from renewable feedstocks. It can reduce carbon emissions by up to 90% and works seamlessly with your existing tank, boiler, and appliances – requiring no expensive reworks or disruptive downtime. The wider LPG industry also has a clear ambition to deliver 100% renewable liquid gas by 2040.
This "drop-in" solution ensures you don't have to choose between sustainability and practicality. BioLPG gives you a clear, affordable path to lower emissions, helping you futureproof your energy supply while providing crucial independence and peace of mind, especially for off-grid operations where grid infrastructure can be a challenge.
Learn more about switching to BioLPG.
Northern Energy Gas: Supporting You with LPG
From tax reliefs to long-term certainty, there’s a lot to feel positive about if your business relies on LPG. The government’s latest energy announcements show a growing recognition of the role flexible, off-grid fuels like bulk LPG – and its renewable alternatives – play in reaching net zero.
At Northern Energy Gas, we’re here to help you make the most of those changes. Whether it’s understanding your VAT entitlements, staying ahead of policy updates, or exploring cleaner fuels like BioLPG, we’ll guide you every step of the way.
If you’ve got questions about your energy use or simply want to talk through what’s next, we’re only ever a phone call away.
Call us on 01423 772 789
Email us at helplpg@northernenergy.co.uk
Or get in touch via our contact page.