Extend the Energy Profits Levy: note

Central fiscal result

-£1.8bn - Net fiscal impact in 2028-29

Low case: -£3.5bn. High case: +£0.8bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Models extend the energy profits levy by 2028-29.
• Baseline is current policy or published departmental plans.
• Central case uses published party or official anchors where available.
• Wider manifesto interactions are excluded unless stated.

Affected population

• Affected units are people, firms, households or providers depending on policy.
• Direct exposure follows the manifesto or government target group.
• Indirect exposure includes suppliers, workers, consumers and taxpayers.
• Weakest counts are widened in the low and high cases.

Gross impact

• Published anchor or scenario central is +£1.8bn in 2028-29.
• Gross costs or receipts are adjusted for behaviour and delivery risk.
• Tax, benefit or procurement offsets are separated in the fiscal build-up.
• The range is deliberately wider where implementation detail is thin.

Fiscal build-up, central case

• Gross tax or receipt yield: -£2.2bn
• Behavioural and avoidance response: +£0.4bn
• Administration and compliance cost: +£0.1bn
• Other tax-base interactions: -£0.1bn

Central net impact: -£1.8bn in 2028-29.

Behaviour and pass-through

• Low case assumes stronger delivery or receipts than central.
• Central case applies moderate behavioural leakage and pass-through.
• High case allows weaker delivery, larger take-up or higher costs.
• Output effects follow incidence, capacity and investment channels.
• Distributional gains do not automatically imply GDP gains.

Phasing

• 2026-27: -£0.2bn. Phased implementation and take-up.
• 2027-28: -£1.0bn. Phased implementation and take-up.
• 2028-29: -£1.8bn. Phased implementation and take-up.
• 2029-30: -£1.8bn. Phased implementation and take-up.

Main source groups

• HM Treasury, "Autumn Budget 2024 policy costings" (2024): Official policy costings show tax and spending impacts, including behavioural assumptions where published; used for implemented Labour tax measures.
• Devereux, Griffith and Klemm, "Corporate Income Tax Reforms and International Tax Competition" (Economic Policy, 2002): Corporate tax changes can affect location, investment and reported profits; relevant to business and bank taxation.
• Kahn and Mansur, "Do Environmental Regulations Cause Industry Flight?" (Journal of Public Economics, 2013): Energy-intensive industries may relocate or contract when regulatory costs differ sharply; relevant to carbon taxes and industrial policy.
• Office for Budget Responsibility, "Economic and fiscal outlook October 2024" (2024): The OBR assessed employer NICs, public investment and Budget-wide output and inflation effects; supports economic-impact and tax-incidence assumptions.
• Labour Party, "Change: Labour Party Manifesto 2024" (2024): The manifesto sets the policy pledge, funding claim or target being modelled; used as the policy definition and manifesto baseline.