Chancellor’s plan for 40% levy on ‘excess returns’ replaces idea of industry revenue cap. Dal Financial Times.
Jeremy Hunt is preparing a raid on electricity generators with a new tax on their “excess returns” as he tries to find money to pay for an inflation-linked rise in benefits and pensions while extending help for households with energy bills. The chancellor will also use Thursday’s Autumn Statement to lift the existing windfall tax on oil and gas companies, known as the “energy profits levy”, from 25 per cent to 35 per cent — while extending it for another two years until 2028. The government had been considering a “revenue cap” on electricity generators in line with a similar move by the European Union. However, Hunt is now preparing a tax of 40 per cent on the “excess returns” produced by the sector above a certain price per megawatt hour, according to people close to the discussions. That threshold has not yet been decided. The combination of the two windfall taxes is expected to generate more than £45bn over six years, although the final figure will depend on energy prices. That is much more than previous Treasury forecasts of £28bn over four years for the energy profits levy. The Treasury declined to comment.