Chancellor Rishi Sunak has announced a much-anticipated intervention worth £15bn to support the poorest households facing mounting energy costs, and introduced a windfall tax on energy companies.
This week energy regulator Ofgem said the typical household energy bill would rise by a further £800 in October, increasing the average household energy bill to £2,800 a year. Ofgem said the rise could put as many as 12 million households into fuel poverty.
The Chancellor has changed his Energy Bills Support Scheme to give all households £200 off bills from October, which would have been repayable over five years. Instead, he has increased the sum to £400, which will now be a grant that will not need to be paid back.
Sunak also told the House of Commons that more than eight million households on means-tested benefits, including universal credit, jobseekers allowance, working tax credit and pension credit, will receive an extra payment of £650 (in two instalments, one from July, the other in autumn).
In addition, eight million pensioner households will benefit from a Cost of Living Payment of £300. A further £150 will be paid to those on disability payments.
Further details regarding eligibility and extra assistance can be found in the Cost of living support factsheet.
To help fund this support, the government is introducing the Energy Profits Levy, a 25% surcharge on profits made by the UK oil and gas sector, which it is hoped will raise around £5bn over the next year. To encourage the oil and gas sector to reinvest profits to support the economy and the UK’s energy security, a ‘super-deduction’-style investment allowance will be introduced within the levy to provide an immediate incentive to invest in UK extraction. The new investment allowance rate is 80% and means the total tax relief on investment nearly doubles - for every £1 businesses invest they will overall get a 91p tax saving.
The Energy profits levy factsheet gives further details about these new measures.
Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.Find out more
Stay up to date
You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.Sign up
News in brief
Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.See more