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)
- 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)
- 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)
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)
- AMAPs do not change rates for motorcycles, bicycles, car/van usage above 10,000 miles, or other types of travel allowances.
Actionable Advice
- Renewable energy businesses: Review project financing; adjust forecasts.
- Businesses & contractors: Audit business travel reimbursements historically; adjust pricing/contracts.
- Vehicle operators: Align licensing strategy to exploit VED exemption window.
- Compliance teams: Update payroll, expense software, and internal policies to reflect new EGL rate and mileage rates.