PRESS RELEASE : Autumn Statement – PwC comments on energy taxation [November 2022]
The press release issued by PWC on 17 November 2022.
Colin Smith, Energy and Infrastructure Tax Partner at PwC UK said:
“The Chancellor has made changes to the Energy Profits Levy, both by extending its duration to March 2028 and raising the rate from 25% to 35%. Today’s announcements increase the overall tax rate on the UK’s oil & gas producers to 75%. The cash benefit of the investment allowance remains broadly unchanged for most expenditure.
“A new 45% Electricity Generator Levy will apply where UK nuclear, renewable and biomass sourced electricity generators sell electricity at prices over £75MWh from 2023 to 2028. The overall headline corporate income tax burden on these businesses will therefore be 70%. This levy, which is charged on revenue rather than profit, replaces the cost-plus revenue cap proposed in the Energy Prices Act.
“These tax increases are forecast to raise £34 billion between 2023 and 2028. The amount of revenue raised will depend on volatile energy prices and may be adversely impacted if higher tax rates and the uncertainty caused by frequent tax law changes reduce activity and investment in the UK’s energy sector.
“Improvement in R&D credits for large companies will be welcome, particularly for those investing in new technology and innovations to support energy transition projects.”
