Imposes new levy on companies generating electricity and increases the Energy Profits Levy to 35 per cent

On 17 November 2022, the Government imposed new windfall taxes on companies of the energy industry. The Energy Profit Levy, which applies to the profits of oil and gas companies, was originally introduced in May 2022 at a rate of 25 per cent but is now being increased to 35 per cent. Also, it reduced the investment allowance from 80 per cent to 29 per cent. However, the investment allowance will remain at 80 per cent for investment expenditure in carbon emissions reducing technology.

Additionally, a new temporary 45 per cent levy was imposed on the extraordinary profits of companies that operate assets generating electricity (Electricity Generator Levy). These levies will apply from 1 January 2023 and will remain in place until the end of March 2028.

• Type:

  • Treatment and operation (Corporate taxation)
  • Promotion and facilitation (Investment incentives)

• Industry:

  • Manufacturing (Manufacture of coke and refined petroleum products)
  • Services (Electricity, gas, steam and air conditioning supply)

• Sources:

  • www.gov.uk, Energy Taxes Factsheet, https://www.gov.uk/government/publications/autumn-statement-2022-energy-taxes-factsheet/energy-taxes-factsheet; https://www.gov.uk/government/publications/changes-to-the-energy-oil-and-gas-profits-levy; https://www.gov.uk/government/publications/electricity-generator-levy, 21 Nov 2022
  • lexology.com, UK Government increases Energy Profit Levy and introduces Electricity Generator Levy, https://www.lexology.com/library/detail.aspx?g=b4004feb-db0f-4040-8619-c9d7cb2c9616&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2022-11-30&utm_term=, 25 Nov 2022