Compliance
Electricity Generator Levy & Vehicle Excise Duty: Balancing Revenue, Fairness, and Practical Impact
Major new tax measures from the Taxation (Energy and Vehicles) Bill will hit electricity generators and heavy goods vehicle owners—and increase reliefs for business travel. Learn what’s coming, when, and how to prepare.
By NomadicTax Research Team • 5-8 min read • July 9, 2026
## Key Policy Measures Introduced
The **Taxation (Energy and Vehicles) Bill 2026-27**, introduced to Parliament on **24 June 2026**, brings three headline tax changes:
- **Electricity Generator Levy (EGL)**: Increased from **45% to 55%** for qualifying periods beginning **1 July 2026**, with effect on revenues above benchmarks. ([gov.uk](https://www.gov.uk/government/publications/increase-in-the-rate-of-the-electricity-generator-levy?utm_source=openai))
- **Approved Mileage Allowance Payments (AMAPs)**: Raised to 55p per mile for the first 10,000 business miles, effective from **6 April 2026**. ([commonslibrary.parliament.uk](https://commonslibrary.parliament.uk/research-briefings/cbp-10913/?utm_source=openai))
- **Vehicle Excise Duty (VED) exemption**: A temporary 12-month exemption for certain heavy goods vehicles licensed between **1 July 2026 and 30 June 2027**. ([commonslibrary.parliament.uk](https://commonslibrary.parliament.uk/research-briefings/cbp-10913/?utm_source=openai))
## Practical Effects by Stakeholder
| Stakeholder | What They’ll See | What to Do |
|------------|------------------|------------|
| Renewable electricity generators | More tax liability on windfall profits; may shift incentive toward fixed-price contracts. | Model cashflows under 55% EGL; explore moving to Contracts for Difference to hedge exposure. |
| Employees & self-employed doing business travel | Increased tax-free mileage payments, boosting take-home value of travel expenses. | Ensure compliance with records; update accounting or payroll tools. |
| HGV owners/operators licensing between dates above | One-year relief from VED for heavy goods vehicles—potential savings of ~£600 for typical HGV. | Time licensing meticulously; confirm eligibility. |
## Example Scenarios
- **Generator A** has revenue above benchmark: from 1 July, extra revenues (above the benchmark) taxed at 55%. Increased EGL means reduced after-tax profit—but relief via Contracts for Difference might help.
- **Courier B**, self-employed, driving 9,000 miles business mileage: under new rate, gets **£4,950** tax-free, up from **£4,050**—a £900 cash-in-hand gain over last year.
- **Transport Co C** licenses 3 HGVs in August 2026: all 3 may get VED exemption for 12 months—reduce overheads significantly.
## What to Watch Out For
- Confirm final text once Bill is enacted—not all measures may take immediate effect.
- EGL extension past 2028 is currently under consideration; horizon planning important. ([questions-statements.parliament.uk](https://questions-statements.parliament.uk/written-statements/detail/2026-04-21/hcws1528?utm_source=openai))
- AMAPs do not change rates for motorcycles, bicycles, car/van usage above 10,000 miles, or other types of travel allowances.
## Actionable Advice
1. **Renewable energy businesses**: Review project financing; adjust forecasts.
2. **Businesses & contractors**: Audit business travel reimbursements historically; adjust pricing/contracts.
3. **Vehicle operators**: Align licensing strategy to exploit VED exemption window.
4. **Compliance teams**: Update payroll, expense software, and internal policies to reflect new EGL rate and mileage rates.