LONDON (Reuters) -Britain’s finance ministry set out details on Tuesday of a temporary 45% tax on excess profits made by some electricity generating companies after Jan. 1.
The tax is part of measures designed to help plug a major hole in public finances and comes after energy firms reported extraordinary profits, thanks to record energy prices following Russia’s invasion of Ukraine.
“The levy will be applied to a measure of extraordinary revenues, defined as revenues from selling periodic output at an average price above 75 pounds ($91.12) per MWh,” the ministry said in a written statement to parliament.
“It will apply to revenues from electricity generation in the UK from renewable including biomass, nuclear, and energy from waste sources and will be focused on the largest generators through a generation threshold of 50GWh of annual output,” it said.
The benchmark price will be indexed to CPI inflation from April 2024.
The government said it had heard calls from companies concerned that the tax could reduce investments in new projects.
“The government continues to recognise the value of capital allowances for supporting investment within a sustainable fiscal strategy, and any further changes will be set out at a future fiscal event,” it said.
Power firms have asked for investments in new production to help offset the tax in a similar way to how the windfall tax is levied on oil and gas companies.
($1 = 0.8231 pounds)
(Reporting by David Milliken and Susanna Twidale; editing by William James and Arun Koyyur)
