Rishi Sunak, the Chancellor, will impose a windfall tax on energy companies as part of a package to help consumers cope with the cost-of-living problem.
Mr Sunak stated that a ‘temporary, timely, and targeted’ 25% Energy Profits Levy would be imposed on oil and gas corporations to reflect their enormous profits.
The charge is estimated to raise £5 billion for the Treasury, and the legislation will include a sunset clause to ensure that it is only in place for a limited time.
The new levy would contain a new 80 percent investment allowance as an incentive for energy companies to invest.
In addition, the Chancellor promised a £15 billion package of household assistance.
A new one-off £650 cost of living payment will be given to eight million of the UK’s most needy households. Separate one-off payments of £300 will be made to senior households and £150 will be made to those receiving disability benefits.
The October energy bill discount will be quadrupled to £400, and the five-year repayment condition will be removed.
Mr Sunak said:
‘We know that people are facing challenges with the cost of living and that is why today I’m stepping in with further support to help with rising energy bills.
‘We have a collective responsibility to help those who are paying the highest price for the high inflation we face. That is why I’m targeting this significant support to millions of the most vulnerable people in our society. I said we would stand by people and that is what this support does today.
‘It is also right that those companies making extraordinary profits on the back of record global oil and gas prices contribute towards this. That is why I’m introducing a temporary Energy Profits Levy to help pay for this unprecedented support in a way that promotes investment.’
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