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The UK imposes an unexpected energy tax on businesses as prices rise

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Britain has announced a 25 per cent windfall tax on oil and gas producer profits and a £15 billion support package for households struggling to meet soaring energy bills.

The move, which gives every UK household a £400 (€470) rebate on their energy bill and more for the lowest income households, marks a change of heart for Prime Minister Boris Johnson’s government, which has previously opposed windfall taxes and they called had a chilling effect on investments.

It is the second policy emergency measure to help with rising bills this year.

Amid strong political pressure to provide more support to people coping with what political opponents and activists have dubbed the cost-of-living crisis, Finance Minister Rishi Sunak said energy companies were making exceptional gains while Brits struggled.

“We will introduce a temporary and targeted energy profits levy, but we have built into the new levy a new investment allowance which means companies will have a new and significant incentive to reinvest their profits,” Mr Sunak told Parliament on Thursday.

“The more a company invests, the less tax it pays.”

Mr. Sunak did not describe it as an unexpected tax. He said it would bring in £5billion over the next 12 months and phase out when oil and gas prices return to normal. He did not detail how the rest of the package would be funded.

He also said there would be a new investment subsidy that would nearly double tax breaks for companies on their investments.

On Tuesday, Britain’s energy regulator announced that a cap on gas and electricity bills will rise by a further 40 percent in October, driven by a rise in global energy prices.

Other European governments have also invested tens of billions of euros in measures to lower energy prices.

Here the government has announced two payment rates.

Shares in Harbor Energy, the UK’s North Sea largest oil and gas producer, turned negative following Mr Sunak’s announcement but quickly recouped losses.

Shares in North Sea-focused British oil company EnQuest fell 8.5 percent, their biggest daily decline in over a month, and well below an index of European oil and gas companies that had risen more than 1 percent.

Shares in oil majors BP and Shell, which are global companies and therefore less affected by UK politics, hit session lows after the announcement but rallied to rise more than 1 percent.

“We have repeatedly emphasized the importance of a stable environment for long-term investments,” said a Shell spokesman, calling the investment-linked tax break a “key principle” of the levy.

The support package was worth £15billion, Mr Sunak said. A similar support package in February was worth £9bn and Mr Sunak said the government was providing a total of £37bn to help consumers.

https://www.independent.ie/business/world/uk-imposes-energy-windfall-tax-on-firms-as-prices-soar-41693814.html The UK imposes an unexpected energy tax on businesses as prices rise

Fry Electronics Team

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