The Electricity Generator Levy is a receipts tax bolted onto the Corporation Tax administrative chassis. Part 5 of Finance (No.2) Act 2023 creates a discrete charge on a 'generating undertaking' (a stand-alone generator or a corporate group containing one) for any 'exceptional generation receipts' above a benchmark price, currently £75/MWh and indexed. The levy is 45%, applies group-wide through a single responsible company, and bites only on generation receipts above a £10m annual allowance and from undertakings generating more than 50GWh a year. It is collected through the CT600 with two dedicated EGL boxes from April 2024, supported by Quantification Notices on each in-year payment and by Quarterly Instalment Payments.
This is deliberately a parallel regime to Corporation Tax, not an adjustment of it. CT taxes profits; EGL taxes a defined slice of revenue. Capital allowances and ordinary CT deductions are not available against the levy base, which is part of why the regime has attracted cross-regime equity arguments against the Energy (Oil and Gas) Profits Levy: under the EPL, the 80% decarbonisation allowance and (until 1 November 2024) the 29% investment allowance allowed upstream operators to flow new investment through the levy base in a way EGL never permitted to low-carbon generators.
The 2023 architecture has one substantive carve-out: the new investment exemption inserted by Finance Act 2024 as s.311A of Finance (No.2) Act 2023. It exempts receipts from qualifying new generating plant where, on 21 November 2023, there was a significant likelihood of the project not proceeding. For new stations the whole receipts are exempt; for capacity uplifts at existing stations only the receipts fairly attributable to the additional capacity (per s.283) are exempt, with the additional capacity treated as a separate station. A Treasury power lets a class of projects be deemed to meet the new investment condition. Contracts-for-difference revenue is outside the levy entirely.
The 21 April 2026 WMSs and the 6 May 2026 HMRC technical note set out the next layer: a rate increase taking effect from 1 July 2026, with primary legislation to be brought through the Electricity Generator Levy Bill announced in the King's Speech 2026. The Bill is pre-introduction, so its precise scope — whether it touches the £75/MWh benchmark, the £10m allowance, the 50GWh threshold, the 31 March 2028 sunset, or introduces a price-trigger termination mechanism analogous to the EPL's ESIM under SI 2024/1175 — is not yet on the public record.
The regime sits in a wider energy-tax ecosystem the analyst should treat as connected but distinct: the EPL (cross-regime parity arguments), the Climate Change Levy (electrolytic hydrogen treatment), the Renewables Obligation indexation changes, and the contracts-for-difference scheme. Each of these affects net generator revenue but operates on a separate statutory footing.