Who is eligible for EII exemptions?
It is a two-step process:
The Sector Level Test.
Firstly, businesses claiming exemption as an EII will need to pass the “sector level test” by demonstrating that they are operating/manufacturing within the UK and within an eligible sector. Eligible sectors are mining, quarrying and those manufacturing particular products as defined by a 4-digit NACE code (Nomenclature des Activites Economiques dans la communaute Europeenne). The full list can be found here [insert link]. The appropriate NACE code will need to be included in the application.
The Business Level Test
Secondly, businesses will need to provide evidence that their electricity costs amount to 20% or more of their GVA (Gross Value Added) over a defined reference period.
GVA is defined as EBITDA (earnings before interest, taxes, depreciation and amortisation) and staff costs including employers’ pension and national insurance contribution.
For businesses which have three or more years of published accounts after 1 January 2012, the reference period will be the three most recent consecutive years of published accounts.
The reference period for businesses will less than three years of published accounts after that date will need to provide all the accounts that are available.
There is a way for businesses which have been trading for less than 21 months and with no published annual accounts to apply but businesses with fewer than two financial quarters of financial data are ineligible.