Summary: Energy Bills Discount Scheme for UK Businesses

On the 9th January, the UK Government confirmed the introduction of a new ‘Energy Bills Discount Scheme’, designed to provide a discount on high energy costs and bring financial stability to UK businesses, charities and public sector organisations from April 2023. This will assist companies with pre-existing agreements, amid dramatic drops in wholesale cost, to regulate expenses and give confidence to others against the danger of prices increasing again.

The scheme is especially beneficial to sectors which use large amounts of energy or are heavily reliant on trading energy, as they will receive a higher level of support. This relief package should help protect these non-domestic users from any unexpected hikes in the cost of energy up until 31 March 2024; offering assurance that businesses which signed contracts before recent price drops are also not unduly penalised by the volatile nature of energy markets.

What was announced? 

For eligible non-domestic customers who have a contract with a licensed energy supplier, the government has announced the following support:

  • From April 2023 to March 2024, eligible non-domestic customers with a licensed energy supplier agreement will receive a maximum £6.97/MWh reduction on gas bills and a maximum £19.61/MWh discount on electricity bills.
  • Gas and electricity support for businesses will have a wholesale price limit of £107/MWh and £302/MWh, respectively. Those with energy costs below these levels will not be eligible for aid.
  • No application is necessary for the discount. Similar to the existing plan, suppliers will apply the reductions to all eligible non-domestic customers’ bills without requiring them to apply.

For eligible Energy and Trade Intensive Industries, the government has announced:

  • These businesses will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.
  • The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.
  • This discount will only apply to 70% of energy volumes and will be subject to a ‘maximum discount’ of £40.0/MWh for gas and £89.1/MWh for electricity.

Businesses in England will also benefit from £13.6 billion in business rate relief over 5 years, £2.4 billion fuel duty cut, alcohol duty freeze for 6 months, and corporation tax protection for those with profits below £250,000, with those making under £50,000 not facing any increase.

If you are a UK business seeking further details on this topic, please do not hesitate to contact us.

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