Screening equality impact assessment for the Electricity Generator Levy (EGL)
Published 8 April 2024
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This publication is available at https://www.gov.uk/government/publications/electricity-generator-levy-egl/screening-equality-impact-assessment-for-the-electricity-generator-levy-egl
Project objectives
The recent high prices in the UK wholesale electricity market means that the UK electricity generation sector are receiving the benefit of high wholesale prices but are not experiencing the increased cost of fuel and so have exceptional receipts. The Government has announced an Electricity Generator Levy (EGL) on these exceptional receipts that will offset the cost of the government’s support for household and business energy bills.
The EGL applies at a rate of 45% to exceptional receipts of companies that generate electricity in the UK from 1 January 2023 to 31 March 2028. Exceptional receipts are those that exceed a benchmark price above that which was typically being achieved in the UK electricity market before the significant increases in wholesale prices.
Currently, companies who generate electricity pay Corporation Tax on their taxable profits through their Company Tax (CT) returns. These CT returns will also be the method of collection for EGL. However, CT and EGL are different taxes, as one is a tax on profits and the other is a tax on exceptional receipts.
EGL will be applied to the receipts of a ‘generating undertaking’, which includes both stand-alone companies and members of a group containing one or more companies that generates electricity. Only one member of such a group will need to report EGL liability for the whole of that group.
To deliver EGL, 2 new dedicated boxes must be introduced as part of the CT annual cycle of change and be included on the Company Tax return from April 2024.
Customer groups affected
Large electricity generator groups and others licensed by the Department for Energy Security and Net Zero (DESNZ) to provide electricity to the National Grid and third parties who manage tax affairs on behalf of electricity-generating groups.
What customers will need to do
From January 2023 companies will need to provide details of:
- EGL exceptional generation receipts
- EGL payable
Further information will also be required in tax computations, but these are not relevant to the changes required on the CT return.
Companies will be required to maintain records of EGL profits to allow relevant boxes on CT600 to be completed after each accounting period and to allow information about how EGL liability has been calculated to be included in the CT returns. Every time a payment is made that includes an amount of EGL, a company must also use a Quantification Notice (QN) to provide details of what that payment includes.
Quarterly instalment payments (QIPs) will apply to the EGL and customers will be able to access support and guidance via their existing business as usual (BAU) channels.
Assessing the impact
We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty and section 75 of the Northern Ireland Act:
People who use different languages (Including Welsh Language and British Sign Language)
Impact on customers
Other languages and British sign language: there is no evidence to suggest specific impacts on those customers within this protected characteristic group.
HMRC is obliged to provide Welsh versions of many documents, publications and services.
Proposed mitigation
The project will offer a Welsh language service to customers, where proportionate, in line with HMRC protocol and annual CT600 updates.
There is no evidence to suggest any specific impacts on customers within the following protected characteristic groups:
- racial groups
- disabled
- sex
- gender reassignment
- sexual orientation
- age
- religion or belief
- people with dependents (carers)
- pregnancy and maternity
- marriage and civil partnership
- political opinion (for Northern Ireland only)
Opportunities to promote equalities
We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside that group.
No such opportunities have been identified with this change. A full equality impact assessment is not recommended.