Streamlined Energy and Carbon Reporting (SECR) applies to certain UK businesses, but not every organisation is required to report under the framework.

Understanding SECR exemptions is an important part of determining whether your business has reporting obligations. Some organisations may fall outside the scope of SECR because of their size, legal structure or specific circumstances, while others may qualify for particular exemptions or reporting concessions.

However, it is important not to assume that a business is exempt simply because it has a relatively small turnover, limited energy consumption or a straightforward operating structure.

This guide explains the main SECR exemption considerations and what businesses should check before deciding whether reporting is required.

What Are SECR Exemptions?

SECR exemptions are provisions that mean certain organisations do not have to comply with all, or in some cases any, of the reporting requirements that would otherwise apply.

The relevant rules depend on the organisation’s legal structure, size, activities and reporting circumstances.

For example, some businesses may fall outside the definition of a qualifying large company, while others may be subject to specific exemptions under the applicable legislation.

The key point is that SECR eligibility must be assessed against the relevant statutory criteria.

Who Is Generally Within the Scope of SECR?

SECR generally applies to:

• Quoted companies.
• Large unquoted companies.
• Large limited liability partnerships (LLPs).

For large unquoted companies and LLPs, an organisation will generally need to meet at least two of the following three criteria:

• More than 250 employees.
• Annual turnover of more than £36 million.
• Balance sheet total of more than £18 million.

These thresholds are subject to the detailed requirements of the relevant legislation.

A business that does not meet the applicable criteria may fall outside the scope of SECR, but the assessment should take account of the organisation’s legal structure and any relevant group or reporting considerations.

Small and Medium-Sized Businesses

Many small and medium-sized businesses are not required to comply with SECR.

This is because the framework generally focuses on quoted companies and larger unquoted organisations and LLPs.

However, businesses should not rely solely on their own turnover or employee numbers when assessing their position.

The relevant criteria may involve more than one financial or operational measure, and the treatment of group structures can also be important.

If a business is close to the thresholds, or its circumstances have changed, it is sensible to review its position carefully.

Are All Unquoted Companies Exempt?

No.

SECR does not apply only to quoted companies. Large unquoted companies can also be required to report.

This is an important distinction because some businesses assume that SECR is only relevant to listed organisations.

A privately owned company may still fall within the scope of the framework if it meets the relevant size criteria.

Are Limited Liability Partnerships Covered?

Yes, certain large LLPs are also within the scope of SECR.

As with large unquoted companies, the relevant size criteria generally involve employees, turnover and balance sheet total.

LLPs should therefore assess their reporting obligations separately rather than assuming that the rules only apply to conventional limited companies.

What About Subsidiaries and Group Companies?

Group structures can make SECR eligibility more complicated.

A business may need to consider whether it is part of a larger group, how the relevant reporting obligations apply to its structure and whether information is already included within another company’s reporting arrangements.

The treatment of subsidiaries and group companies depends on the applicable rules and the specific circumstances.

Businesses should therefore avoid assuming that being a subsidiary automatically means they are exempt, or that a parent company’s reporting automatically removes every obligation.

Are There Exemptions for Low Energy Consumption?

SECR is not generally a framework where businesses can simply decide they are exempt because their energy consumption is low.

The reporting obligations are primarily determined by the organisation’s status and the applicable criteria.

However, there are specific provisions concerning certain types of energy consumption and reporting circumstances.

Businesses should establish what information is relevant to their reporting scope rather than assuming that low consumption removes the need to assess compliance.

What Is the “Unconsumed Energy” Exemption?

One specific provision relates to energy that is not consumed by the organisation itself.

Where energy is supplied to a business but not consumed by it, the treatment of that energy may be relevant to the reporting requirements.

For example, certain arrangements involving energy supplied to customers or other parties may require careful consideration.

The precise application depends on the circumstances, and businesses should ensure they understand which energy consumption falls within their reporting obligations.

What If a Business Has No Relevant Energy Consumption?

A business may have limited or unusual energy consumption, but that does not automatically mean it can disregard SECR.

The organisation should first establish whether it is within scope and then determine what reporting information is required.

Where specific exemptions or concessions apply, these should be assessed against