ENERGY companies and generators will be hit by an extra windfall tax, the Chancellor has announced.
Laying out new tax measures in his Autumn Statement today, Jeremy Hunt confirmed that energy production giants will pay more tax after their profits spiralled this year.
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In May, then-Chancellor Rishi Sunak announced a temporary 25% tax on companies’ profits made after May 26 2022, running until 2025.
It is now set to be raised to 35% until March 2028.
From January 1, a new temporary 45% levy on electricity generators will also roll out.
Together, these two taxes will raise £14billion next year, Mr Hunt said.
Announcing the measure, Mr Hunt said: “I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices.
“But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses.”
Mr Hunt also announced in his Budget:
There had been increasing pressure in recent weeks to extend and raise the tax as industry giants like Shell and BP have announced record profits.
The money raised is set to be used to pay for the continuation of the Energy Price Guarantee.
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The scheme restricts the amount that companies can charge for hourly energy usage, holding the average household bill below £2,500 per year.
Labour have called on Mr Hunt to close loopholes in the scheme.
Under the previous rules, companies could offset their tax requirements by investing profits into the UK.
In one case, this meant that Shell did not have to pay any extra tax despite profits of £25.4 billion this year.
Energy company SSE recently slammed the proposals for a bigger windfall tax.
They argued that it will hinder the UK’s progress in building up domestic energy sources.
The Chancellor also announced that more people would pay the 45p top rate of income tax.
From April, anyone earning more than £125,000 will pay the additional income rate – down from the current threshold of £150,000.
The raid on the rich is set to cost 246,000 workers around £580 extra per year as they’re pulled from the 40p to 45p band.
He vowed to fill the black hole in the public finances, saying “difficult decisions” needed to be made to support the economy on a “path to sustainable growth”.
