Energy: Taxation
The question
To ask the Chancellor of the Exchequer, with reference to Budget 2025, what assessment her Department has made of the potential impact of the proposed scrapping of the Energy Company Obligation scheme on the level of energy sector tax revenue.
Answered by Dan Tomlinson
The Energy Company Obligation is a regulated obligation on suppliers and is not a tax measure. However, as VAT is placed on the total cost of energy, lowering energy bills through ending this scheme will reduce the tax base for VAT on domestic energy. This measure, alongside the Government funding 75% of the legacy Renewables Obligation, will save households an average of £150 off their energy bills.
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