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How Soaring Energy Levies Affect UK Businesses & What You Can Do
The UK’s Electricity Generator Levy is rising to 55% from 1 July 2026—here’s how this impacts business costs, investment decisions, and actionable strategies to respond.
By NomadicTax Research Team • 5-8 min read • July 9, 2026
## What’s Changing with the Electricity Generator Levy (EGL)
- From **1 July 2026**, the EGL rate increases from **45% to 55%**. This is part of the government’s package of measures in the *Taxation (Energy and Vehicles) Bill 2026-27*. ([gov.uk](https://www.gov.uk/government/publications/increase-in-the-rate-of-the-electricity-generator-levy?utm_source=openai))
- The change is designed to capture a greater share of exceptional revenues that generators earn when gas prices spike, particularly in light of global energy shocks. ([gov.uk](https://www.gov.uk/government/news/decisive-action-to-break-influence-of-gas-on-electricity-prices?utm_source=openai))
- For “straddling periods” (periods crossing the 1 July date), only the portion of exceptional receipts from 1 July onward will be taxed at the higher rate. ([publications.parliament.uk](https://publications.parliament.uk/pa/bills/cbill/59-02/0103/en/260103enlp.pdf?utm_source=openai))
## Who’s Hit & What It Means
- **Large electricity generators**, especially those not under long-term fixed price contracts, may see substantially more EGL liability.
- Consumers and businesses may indirectly be affected if generators shift costs, although the government claims this measure **is not expected to significantly raise electricity prices**. ([hansard.parliament.uk](https://hansard.parliament.uk/Commons/2026-07-01/debates/234C6FC2-612D-46D4-B682-1F8B14BB2685/Taxation%28EnergyAndVehicles%29Bill?utm_source=openai))
- Energy investors will watch carefully: certainty on future policy, including how long the levy at 55% rate remains, will be key for long-term investment planning.
## Actions Businesses Can Take
1. **Review contract types.** Generators should assess whether switching from spot market exposure to fixed price “Contracts for Difference (CfDs)” is viable.
2. **Model cash flows under higher EGL.** Forecast the impact of a 10 percentage-point increase on expected revenues to plan for liquidity and pricing.
3. **Engage with the government process.** These changes are part of a Bill—stakeholders and trade bodies should feed into consultations and track parliamentary scrutiny.
4. **Resilience planning.** For industries with large energy costs (manufacturing, data centres), expect supply chain or input price pressures. Consider seeking support or hedging strategies.
## Example Scenario
- A renewable generator currently exposed to high gas prices earns £100 million in exceptional receipts. At 45% rate, the levy charge was £45 million. Under the new 55% rate, it becomes **£55 million**, meaning an extra **£10 million** paid to the government—which could come out of margins unless passed on.
## Final Thoughts
This escalation of the EGL reflects a broader shift: greater revenue extraction in times of geopolitical disruption and rising energy prices. Businesses in the utilities sector, or those heavily exposed to wholesale electricity costs, should update financial forecasts, renegotiate contracts, and stay informed about further legislation. The 55% rate is set from 1 July 2026; keep an eye on any reviews that might adjust timing or terms.