In the first article of our series, Tax in 2024 for the
future energy sector, the TLT Tax team considers the Electricity
Generator Levy (EGL) in the context of the recently announced
investment exemption.
What is the EGL?
It's a tax, introduced from 1 January 2023, which is charged
at 45% on the exceptional generation receipts of electricity
generating businesses (referred to in the legislation as
"generating undertakings").
Why was the EGL introduced?
In response to a rise in global electricity prices, in May 2022
the government announced a cap on the amount charged for
electricity to support householders and businesses with the rising
costs of living.
The high cost of electricity led to many UK generators receiving
greatly increased revenues, in excess of normal commercial returns.
Consequently, the government announced the introduction of the EGL
at the Autumn Statement 2022 with the objective of taxing those
excess revenues.
