Tax Planning

Electricity Generator Levy’s Increase: What Renewable Generators Must Know

From July 2026, the UK dimensions of the Electricity Generator Levy rise—renewables-sector stakeholders need to understand the 55 % rate, new duration, and how to plan around EGL exposure.

By NomadicTax Research Team • 5-8 min read • May 9, 2026

## What reached the UK tax world recently? On **May 6, 2026**, HM Treasury published a technical note announcing that the **Electricity Generator Levy (EGL)** rate will increase from **45 % to 55 %**, effective **1 July 2026**, and that the levy’s duration will be extended beyond its previously expected end date in April 2028. ([gov.uk](https://www.gov.uk/government/publications/electricity-generator-levy-technical-note--2/electricity-generator-levy-rate-increase-from-1-july-2026?utm_source=openai)) ## Who’s in scope? - Generators of electricity in the UK whose receipts exceed exceptional benchmark performance; typically **renewable, nuclear, biomass** or energy-from-waste generators. ([gov.uk](https://www.gov.uk/government/publications/electricity-generator-levy-introduction/electricity-generator-levy?utm_source=openai)) - Those with **qualifying periods** overlapping the rate change must apportion receipts; corporate accounting periods that straddle 1 July 2026 need time-based allocation of income. ([gov.uk](https://www.gov.uk/government/publications/electricity-generator-levy-technical-note--2/electricity-generator-levy-rate-increase-from-1-july-2026?utm_source=openai)) - Businesses with revenue over certain thresholds (e.g., 50 GWh generation threshold and £10 million receipt allowance) remain subject to the levy rules. ([gov.uk](https://www.gov.uk/government/publications/electricity-generator-levy-introduction/electricity-generator-levy?utm_source=openai)) ## Practical implications & planning tips **Budgeting and cashflow:** A 10 percentage-point jump in rate means generators expecting exceptional receipts post July must provision more to tax. For a generator with £100 million exceptional receipts, the extra tax owed increases by ~£1 million (10 % of £100m), assuming full exposure. **Timing decisions:** If possible, recognise receipt and related costs in accounting periods before the new rate kicks in, especially where projects or contracts straddle the rate change. Be transparent with auditors and HMRC when accounting periods cross over. **Capital investment strategy:** The increased rate impacts returns; consider delaying new projects until tax incentives or reliefs become available, or structure investments in ways that may qualify new-capacity exemptions (if available). **Model scenarios:** Create sensitivity analyses showing revenue under 45 % vs 55 % rates; consider worst-case gas price spikes escalate wholesale electricity prices (which elevates exceptional receipts triggering higher EGL liability). ## Example calculation GreenWind Ltd has a 12-month accounting period ending 30 September 2026. Its exceptional receipts for those 3 months from 1 July to 30 September are £15 million. The apportionment for that period: receipts split based on time. Those 3 months fall under 55 % rate; earlier months under 45 %. So: - April-June: say £25 million at 45 % rate = £11.25 million EGL - July-September: £15 million at 55 % rate = £8.25 million EGL Make sure to separate periods accurately in financial reporting. ## Impact & risk **High** impact—because for many in the renewable sector, revenue swings are large, and EGL is tied to those swings. Developers, investors, sponsors must factor in these higher shares taken by government. Failure to anticipate could affect project viability or lead to cashflow issues. There’s also reputational risk if underestimations lead to late payments or inaccurate tax filings. **Key risks include:** - Misallocating revenue periods and under-reporting liability - Unexpected legislative or regulatory changes if benchmark price adjustments or definitions shift - Dependency on price benchmarks aligned with CPI which may widen exposure as inflation climbs ## Actionable recommendations - Review upcoming contracts: lock fixed price terms where possible - Update financial models with 55 % EGL for post-1 July receipts - Verify accounting period timing and ensure revenue and costs are tracked by date - Seek specialist tax advice especially for large capital projects or group organisations with multiple generation units across different accounting dates Renewables’ future depends not only on capacity but costs—EGL under higher rates means higher tax costs. Design accordingly.