UK's Finance Minister Hikes Energy Windfall Tax, Extends It To Power Firms
November 17, 2022
British finance minister Jeremy Hunt said on Thursday the government would increase a windfall tax on oil and gas firms and extend it to power generation firms as he seeks to raise money to plug a major hole in the public finances.
Soaring oil and gas prices in the wake of Russia's invasion of Ukraine have sent household energy bills to record highs, triggering Britain's worst cost of living crisis in generations.
Hunt said the levy on oil and gas companies would be increased to 35% from its current rate of 25% and extended until the end of March 2028.
The windfall tax will also be expanded to electricity generators with a levy of 45% being applied from Jan. 1 to revenues the government deems "extraordinary", from low carbon power generators such as wind and nuclear.
Currently the cost of producing electricity from gas-fired power stations is usually the benchmark for setting the wholesale electricity price that helps to determine how much people pay for their energy.
This means generators of renewable and nuclear plants can benefit from high wholesale prices.
Treasury documents show the 45% tax on low-carbon power generators would apply to revenues made on power generation at an average price over 75 pounds per megawatt hour (MWh).
