The Windfall Tax:
Following updates on the cost-of-living crisis that we’ve previously covered in our blogs, the Chancellor has recently U-turned and announced a 25% Windfall Tax on energy firms. This comes with a lot of criticism from the opposition and even Tory backbenchers, especially in light of the damning Sue Gray Report and vote of confidence.
This handy reminder will tell you the key take-aways from the announcement in case you missed it the other week!
More than 8 million households will receive more than £1,000 in support to help with the crisis as part of a £15 billion package
Every household in Britain will receive a £400 discount on their energy bills in October, although the price cap is set to rise to over £2000 so many say this will not be enough
8 million households on means-tested benefits would receive £650 in direct payments, pensioners who qualify for the winter fuel payment will receive an additional £300. Those who are disabled will receive an extra £150.
The Liberal Democrats and Labour have been calling for a windfall tax since January but Tory ministers, such as Johnson, rejected this as it could ‘deter’ investment.
Sunak describes his plan as ‘sensible middle ground’ because it includes a new investment allowance, for every pound invested by a company, they will get 90% back in tax relief, the more they invest, the less tax they pay. You can read more about this
The Business Secretary Kwasi Kwarteng called the windfall tax a bad idea only a couple of weeks ago
Our Managing Director Paul Goodman commented:
“Whilst it is good to see some much-needed help being made available to households around the UK. There still seems to be very little in the way of support to the millions of SME’s up and down the UK.
SME’s are being squeezed by rising debt costs, supply chain issues, staffing shortages and now the rising cost of raw materials and energy. All at a time when they are being asked to accelerate out of the pandemic. I fear without further targeted support, businesses are going to struggle to navigate these additional shocks to the economy and their businesses.”