Sunak announces discount on energy bill, windfall tax and multi-billion package support

Every household in the UK is to get an energy bill discount of £400 this autumn as part of a package of new measures announced today (26) to tackle soaring prices.

The poorest households will also get a payment of £650 to help with the cost of living, Chancellor Rishi Sunak said as he also announced a 25 percent windfall tax on oil and gas producers’ profits, alongside a £15 billion package of support for households struggling to meet soaring energy bills.

It follows warnings that millions could be left struggling if energy prices rise again in October as expected.

The UK government has been facing intense political pressure to provide more support for bill payers coping ongoing cost-of-living crisis.

Announcing one-off tax, Sunak said energy firms were making extraordinary profits while Britons struggled.

“We will introduce a temporary and targeted energy profits levy but we have built into the new levy a new investment allowance that means companies will have a new and significant incentive to reinvest their profits,” Sunak told parliament.

Alongside the action we’ve already taken this year today's measures will ensure:

The vast majority of households receive £550.

Pensioners receive £850.

And almost all of the eight million most vulnerable households will receive support of at least £1,200.

Watch 👇 pic.twitter.com/fmUVtPswpV

— Rishi Sunak (@RishiSunak) May 26, 2022

Sunak did not refer to it as a windfall tax. He said it would raise 5 billion pounds in the next 12 months.

He also said there would be a new Investment Allowance that would nearly double the tax relief available for firms on their investments.

The package of support was worth £15 billion and would support around a third of British households, Sunak said.

On Tuesday (24), the UK energy regulator said that a cap on gas and electricity bills was set to rise by another 40 percent in October. The increase in the cap would have pushed up the average annual bill by more than £800, after the regulator Ofgem increased it by £693 in April to £1,971.

Ofgem warned that 12 million households could be pushed into fuel poverty, where they are paying more than 10 percent of their household income on energy.

The support measures come as the prices of food, fuel and other goods have pushed inflation to a 40-year high.