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Electricity Generator Levy Bill

Lifecycle: Implementation Environmental Audit Committee · HM Revenue and Customs · HM Revenue & Customs · HM Treasury · Public Accounts Committee Last regenerated 1 month, 3 weeks ago

Summary

What this is

The Electricity Generator Levy is a 45% temporary tax on exceptional in-scope generation receipts (above a benchmark price, currently £75/MWh indexed, with a £10m annual allowance and a 50GWh de minimis) earned by large low-carbon electricity generators in the UK. It runs from 1 January 2023 to 31 March 2028 under Part 5 of Finance (No.2) Act 2023 and is collected through the Corporation Tax return.

Why it matters

The levy captures windfall revenues arising from gas-set wholesale electricity prices in 2022-23 and offsets the cost of household and business energy bill support, but its design has been contested for its asymmetry with the Energy Profits Levy's investment allowances, which generators argue penalises low-carbon investment relative to oil and gas. A King's Speech 2026 Bill and a flagged rate increase from 1 July 2026 now place the regime back into active legislative play.

Current status

On 21 April 2026 the Exchequer Secretary issued written ministerial statements confirming a rate increase from 1 July 2026, accompanied by a fresh HMRC technical note; the King's Speech 2026 then named an Electricity Generator Levy Bill in the Government's legislative programme, taking the thread into pre-legislative scrutiny.

What changed recently

  • 13 May 2026 — King's Speech 2026 names an Electricity Generator Levy Bill in the legislative programme.
  • 6 May 2026 — HMRC technical note published on the EGL rate increase taking effect from 1 July 2026.
  • 21 Apr 2026 — Twin WMS (HCWS1528 / HLWS1535) confirm the EGL rate change and the Government's intent to legislate.
  • 29 Apr 2026 — PQ presses DESNZ on how the marginal pricing mechanism interacts with EGL-affected generator revenues.
  • 28 Jan 2026 — Renewables Obligation indexation consultation outcome published — adjacent revenue-side change for the same generator cohort.

Key documents

Framework

Statutory basis

Operationalising

Implementation

Scrutiny

Review

Stakeholders

Sponsoring department 2

  • HM Treasury → src
    Policy owner for the EGL design, rate-setting and the 2026 Bill announced in the King's Speech.
  • HM Revenue and Customs → src
    Administers the levy via the CT600 (two dedicated boxes from April 2024), Quantification Notices and Quarterly Instalment Payments; published the 2026 rate-rise technical note.

Sponsoring minister 4

  • Dan Tomlinson → src
    Then Exchequer Secretary to the Treasury when HCWS1528 was issued on 21 April 2026 announcing the EGL rate increase from 1 July 2026 (current status unknown — treat as historical).
  • Lord Livermore → src
    Then Financial Secretary to the Treasury when HLWS1535 was laid on 21 April 2026 relaying the Exchequer Secretary's EGL statement to the Lords (current status unknown — treat as historical).
  • Gareth Davies → src
    Then Exchequer Secretary to the Treasury who signed off the 2023 EGL new-investment-exemption TIIN and made the 12 June 2023 energy-tax WMS introducing the EPL ESIM (since reshuffled).
  • Claire Coutinho → src
    Then Secretary of State for Energy Security and Net Zero who made the 16 January 2024 Energy Update WMS covering road-fuels and energy-tax context relevant to the EGL package; the responsible Secretary of State is now Ed Miliband.

Lead committee 3

  • Environmental Audit Committee → src
    Concluded that the Government was not providing renewable generators with the same level of generous tax reliefs as oil and gas under EPL — the core asymmetry critique of the EGL/EPL package.
  • Public Accounts Committee → src
    Raised earlier concerns that HM Treasury and HMRC viewed environmental tax consequences as the responsibility of other departments — relevant context for EGL administrative ownership.
  • Delegated Powers and Regulatory Reform Committee (Lords) → src
    Eighth Report covered the Energy (Oil and Gas) Profits Levy Bill as part of its statutory scrutiny of the parallel windfall regime.

Commentator 1

  • House of Commons Library → src
    Published Commons Briefing Paper CBP-9578 on the Energy (Oil and Gas) Profits Levy Bill 2022-23 — the standard reference for the parallel windfall regime.

Political commitments

  • commitment King's Speech announcement Labour · 2026 · King's Speech announces Electricity Generator Levy Bill

    Electricity Generator Levy Bill in the 2026 legislative programme

    Why linked: King's Speech 2026 Background Briefing Notes name the EGL Bill, taking the thread to pre-legislative scrutiny.

  • commitment Ministerial statement Labour · 2026 · Electricity Generator Levy

    EGL rate increase from 1 July 2026

    The Electricity Generator Levy (EGL) was introduced in 2023 and is a temporary tax on windfall revenues for large renewables.

    Why linked: Commons WMS HCWS1528 confirms the rate increase and intent to legislate.

  • commitment Ministerial statement Labour · 2024 · Changes to the Energy (Oil and Gas) Profits Levy

    EPL reform package — read-across pressure for EGL recalibration

    the rate of the Energy Profits Levy will increase to 38% from 1 November 2024, bringing the headline rate of tax on upstream oil and gas activities to 78%

    Why linked: The July Statement 2024 EPL reform sets the cross-regime comparator and political baseline for any EGL recalibration.

  • commitment Ministerial statement Conservative · 2023 · Introduction of a new investment exemption for the Electricity Generator Levy

    New investment exemption introduced from 22 November 2023

    An exemption for receipts from new investments in electricity generating stations will strengthen the incentives for renewable energy generators to expand

    Why linked: Autumn Statement 2023 commitment delivered through Finance Bill 2023-24 New Clause 5 inserting s.311A.

Open questions & gaps

Pending in the lifecycle

  • Publication of the Electricity Generator Levy Bill and accompanying explanatory notes following the King's Speech 2026 announcement.
  • Quantum of the rate increase taking effect from 1 July 2026 — the technical note signals direction but the operative statutory rate remains to be legislated.
  • Whether the EGL will acquire an Energy Security Investment Mechanism-style price-trigger termination (as exists for the parallel EPL under SI 2024/1175).
  • Whether the £75/MWh benchmark, the £10m annual allowance and the 50GWh threshold are reopened in the Bill.
  • Treatment of contracts-for-difference and Renewables Obligation interactions following the January 2026 RO indexation consultation outcome.

Beyond the corpus

  • MISSING A standalone consultation document on the 2026 Bill — The 2022 EGL was preceded by a technical note rather than full consultation; with the regime now reopened via primary legislation, draft-legislation consultation is the typical pattern.
  • MISSING An updated OBR costing of the rate-rise package — Material fiscal changes are usually scored at a fiscal event; only the original 2022 TIIN figures and the 2023 exemption costing are in the corpus.
  • MISSING An updated equality impact assessment for the rate-rise package — HMRC's 2024 EQIA covers the original design only; rate-rise should trigger a fresh screening.

Confidence gaps

  • The body of the King's Speech 2026 PDF was not retrieved as a document block — the Bill's stated scope is inferred from the briefing-notes index entry.
  • Live ministerial-currency flags for the 21 April 2026 statement signatories were unavailable in the facts pack, so role notes are written historically.