Commons Sense

House of Commons · Written Ministerial Statement

Treasury Update

20 December 2022 · Treasury

Proposed by James Cartlidge Con South Suffolk

ClimateEnergyTaxation

Summarised by AI from the official record, so it can contain mistakes.

View on Parliament.uk

At a glance

Key points

  • The UK government will impose a 45% tax on extraordinary returns from UK electricity generators starting January 1, 2023.
  • The levy aims to mitigate the effects of high electricity prices on households and businesses.
  • The tax measure is set to expire on March 31, 2028.

Issue summary

The statement addresses the imposition of a temporary tax on electricity generators in response to record-high wholesale gas and electricity prices.

Action requested

From January 1, 2023, a 45% tax will be applied to extraordinary returns made by UK electricity generators. This levy is designed to address the impact of high electricity prices on households and businesses while maintaining support for investment in clean energy. The measure will expire on March 31, 2028.

Key facts

  • A temporary 45% tax on extraordinary returns from some UK electricity generators starting January 1, 2023.
  • Extraordinary revenues are defined as revenues above £75/MWh, approximately 1.5 times the average price over the last decade.
  • The levy applies to revenues from renewable (including biomass), nuclear, and energy from waste sources with a generation threshold of 50GWH annually and a £10 million allowance.
  • The tax will end on March 31, 2028, but may be reconsidered if prices fall below the benchmark price.
  • In April 2024, the £75/MWh benchmark price will be indexed to CPI inflation.
  • Relief is provided for certain exceptional costs that reduce benefits from higher electricity prices.
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