Reading the bill’s publication files and writing a plain-English Green Book note…
Reading the bill’s publication files and writing a plain-English Green Book note…
Proposal 4207
A Bill to Increase the rate of electricity generator levy and mileage amounts relating to income tax and to provide for temporary rates of vehicle excise duty for goods vehicles.
Appraisal prepared 7 Sept 2026, 19:23. Next scheduled update 8 Sept 2026, 19:23.
Sponsor: HM Treasury
Open publications on bills.parliament.ukPlain-English note and Green Book five-case reading from the official papers — the heart of this page.
In plain English
The Act makes three tax changes. It increases the special tax on electricity generators’ excess profits from 45% to 55%. It raises the tax‑free mileage rate for business use of a private car or van from 45p to 55p per mile for the first 10,000 miles each year, including a matching increase for self‑employed people using simplified mileage rules. It also cuts Vehicle Excise Duty (road tax) to a flat £1 for many heavy goods vehicles used for business, but only for licences taken out between 1 July 2026 and 30 June 2027.
Electricity generation companies that earn ‘exceptional’ revenues pay more levy on those extra earnings from 1 July 2026, across the UK and certain offshore areas. Employees who drive their own car or van for work, and are paid mileage, are affected because more of what they receive can be tax‑free; the same new 55p rate also applies to self‑employed people and individual property landlords who use HMRC’s simplified mileage rules. Haulage and logistics businesses, and others running qualifying heavy goods vehicles over 3,500kg for trade, are affected by the temporary £1 road tax; this includes some island goods vehicles and heavy tractive units.
Compared with now, the government collects more tax from certain power generators when electricity prices give them unusually high revenues, and the law fixes how to apply the higher 55% rate where accounting periods cross 1 July 2026. Many workers doing business mileage in their own car or van will be able to receive, or claim relief on, up to 55p per mile tax‑free for the first 10,000 miles a year instead of 45p, and self‑employed people using mileage simplification can deduct 55p instead of 45p per mile. Most qualifying heavy lorries will pay only £1 in Vehicle Excise Duty for a 12‑month licence started between July 2026 and June 2027, and the Act also lets them get a six‑month licence even though the usual rule that blocks very low‑value six‑month licences is suspended for this group.
Same bill, simpler words — a deeper read without the jargon.
This law makes three money rules. First, when big electricity companies make very high extra profits because prices are high, the government will take a bigger slice of those extra profits in tax. Second, if you use your own car for your job, your boss can pay you a bit more per mile without you paying income tax on it, and people who work for themselves can also count more per mile as a cost. Third, big lorries that help move food and other goods around the country will almost not pay road tax for one year, to help keep transport costs down.
Green Book 2026 · 5 Case Model
The levy rise aims to capture more of the ‘windfall’ gains that electricity generators receive when gas prices are high, because power prices are linked to gas even when gas is not used to make the electricity. Government argues this supports a fairer sharing of the proceeds of electricity production in the current economic climate and encourages older generators to move onto new fixed‑price contracts, which is part of its wider plan to weaken the link between electricity and gas prices. The temporary £1 Vehicle Excise Duty rate is meant to support the heavy goods vehicle sector, which ministers say is hit especially hard by diesel costs and is vital to keeping supply chains working so that cost pressures do not spread through the wider economy.
The higher Electricity Generator Levy is described as supporting the Government’s wider work to break the link between electricity and gas prices by nudging older generators towards new fixed‑price contracts, so it aligns with energy market reform goals as set out in the Explanatory Notes. The mileage rate changes are framed as an income tax and National Insurance measure affecting both employees and self‑employed people, suggesting alignment with policy on fair treatment of business travel costs. The temporary £1 VED rate for heavy goods vehicles is presented as a targeted cost‑of‑living and supply‑chain support measure, responding to energy‑related cost pressures on transport.
Accountability · outcome beside Green Book evidence
Taxation (Energy and Vehicles) Act 2026 became law. The official papers we read covered most of the Green Book five cases with concrete detail. That does not prove the outcome was “right” — it means the case on paper was relatively complete for accountability scrutiny.
Strategic: The levy rise aims to capture more of the ‘windfall’ gains that electricity generators receive when gas prices are high, because power prices are linked to gas even when gas is not used to make the electricity. Government argues this supports a fairer sharing of the proceeds of electricity production in the current economic climate and encourages older generators to move onto new fixed‑price contracts, which is part of its wider plan to weaken the link between electricity and gas prices. The temporary £1 Vehicle Excise Duty rate is meant to support the heavy goods vehicle sector, which ministers say is hit especially hard by diesel costs and is vital to keeping supply chains working so that cost pressures do not spread through the wider economy.
Economic: The papers provided do not include an impact assessment or any overall £ figures for the total extra revenue from the higher Electricity Generator Levy, the cost of higher mileage allowances, or the revenue lost from cutting heavy goods vehicle VED to £1; they set out the policy mechanics but not net present value, equivalent annual net direct cost to business (EANDCB), or a bill‑level benefit–cost ratio. Any detailed fiscal costings would need to be taken from other HM Treasury or Budget documents not included here.
Commercial: There is no external procurement: all three measures are implemented through changes to existing tax and licensing systems run by HM Revenue and Customs and the Driver and Vehicle Licensing Agency under HM Treasury and the Department for Transport. Electricity Generator Levy collection continues under the Corporation Tax (Instalment Payments) Regulations, with some adjustments to how instalments reflect the higher rate, while VED changes are delivered by treating parts of the Vehicle Excise and Registration Act 1994 as temporarily amended.
Financial: The Bill text makes clear that the measures are part of ‘raising the necessary supplies’ for the Crown and ‘making an addition to the public revenue’, implying that the higher Electricity Generator Levy is intended to increase central government income. The higher AMAP and simplified mileage rates reduce income tax and National Insurance receipts on affected mileage, while the £1 VED rate reduces VED receipts from qualifying heavy goods vehicles; however, the papers do not state which departmental budgets will adjust or how these revenue effects are offset. Any detailed affordability assessment would rely on Treasury budget and fiscal documents not included here.
Management: HM Treasury sponsors the Act and sets the tax policy; HM Revenue and Customs administers the Electricity Generator Levy and income‑tax‑related mileage rules through existing corporation tax and income tax systems. The Driver and Vehicle Licensing Agency applies the temporary £1 VED rates using the Vehicle Excise and Registration Act 1994 framework, as treated as amended by the Act. Oversight remains within the usual ministerial and departmental structures for tax and vehicle excise duties; no new boards or regulators are created.
This is an accountability reading, not a recommendation and not a score. It does not say whether Parliament should have passed or rejected the bill. It only sets the actual parliamentary outcome beside how complete the Green Book five-case evidence was in the official papers.
These UK Acts sit in a similar policy space and are already law. Pairing uses this proposal’s official papers (and the plain-English note themes). It is not a verdict that the proposal is redundant or unnecessary.
UK Act · Royal Assent · 2024-03-21
National Insurance Contributions (Reduction in Rates) Act 2024
Same policy area (“Economy / tax”). Matched using wording from this bill’s official papersAlready law — useful context when asking whether this bill adds something new or mainly revisits covered ground.
UK Act · Royal Assent · 2023-12-19
National Insurance Contributions (Reduction in Rates) Act 2023
Same policy area (“Economy / tax”). Matched using wording from this bill’s official papersAlready law — useful context when asking whether this bill adds something new or mainly revisits covered ground.
UK Act · Royal Assent · 2021-02-11
Taxation (Post-transition Period) Act 2020
Nearby policy wording to this bill. Matched using wording from this bill’s official papersAlready law — context only, not a verdict on whether the new bill is needed.
UK Act · Royal Assent · 2018-09-14
Taxation (Cross-border Trade) Act 2018
Nearby policy wording to this bill. Matched using wording from this bill’s official papersAlready law — context only, not a verdict on whether the new bill is needed.
UK Act · Royal Assent · 2014-12-18
Taxation of Pensions Act 2014
Nearby policy wording to this bill. Matched using wording from this bill’s official papersAlready law — context only, not a verdict on whether the new bill is needed.