How is the windfall task affecting green investment?

[jayc89]

Perhaps I'm missing something obvious. We hear time and time again from the energy companies that the imposed windfall tax is affecting investment in renewables. Surely if these companies pumped money into renewables, this would be pre-tax money, meaning their profits wouldn't look so large, as its been reinvested in their business, and therefore there would be less for any windfall tax to deduct from.

 

Am I missing something?

[SteamyTea]

2 minutes ago, jayc89 said:

Am I missing something?

I don't know that much about it, but I think there is a reduction if they invest in low carbon technologies (probably were going to do that anyway) and I think they may be taxing low carbon generation at the same windfall rate (35%).

So snookered both ways.

 

Just convinces me more that for every rule we have that makes something compulsory, we have another rule that makes it illegal.

[Kelvin]

They prefer to spunk the profits on dividends and buying up their own shares. 

[ToughButterCup]

7 minutes ago, jayc89 said:

...

Am I missing something?

 

No, these days nobody (except the self-interested) can miss the discomforting display of venal self interest. 

I'm annoyed at my own passivity about it.

Back in the 70s I (we?) would be back at Grosvenor Square singing sweet lullabies to the relevant MPs, Politicians and Members of the HoL .

 

Now - I'm too self-interested. 

[SteamyTea]

23 minutes ago, ToughButterCup said:

Now - I'm too self-interested. 

And if the new legislation goes though, you will be a criminal, for just thinking about it, maybe.

 

https://www.theguardian.com/uk-news/2021/mar/14/new-anti-protest-bill-raises-profound-concern-human-rights-groups-say

[jayc89]

1 minute ago, SteamyTea said:

And if the new legislation goes though, you will be a criminal, for just thinking about it, maybe.

 

https://www.theguardian.com/uk-news/2021/mar/14/new-anti-protest-bill-raises-profound-concern-human-rights-groups-say

 

Nothing wrong with a good protest, we need more of them, IMO. Plebs blocking public highways is what grinds my gears. 

[SteamyTea]

1 minute ago, jayc89 said:

Plebs blocking public highways is what grinds my gears

Yes.

These twats yesterday did it for me, all I wanted was a coffee from a national chain.

 

https://www.cornwalllive.com/news/cornwall-news/scene-a30-crash-cornwall-driver-8033042

[jayc89]

2 minutes ago, SteamyTea said:

Yes.

These twats yesterday did it for me, all I wanted was a coffee from a national chain.

 

https://www.cornwalllive.com/news/cornwall-news/scene-a30-crash-cornwall-driver-8033042

 

Totally different from someone gluing themselves to the tarmac, no? 

[SteamyTea]

19 minutes ago, jayc89 said:

 

Totally different from someone gluing themselves to the tarmac, no? 

Not from where I was sitting.

Normal in the summer when the Emmets are down and forget that the rules of the road are the same this side of the Tamar as they are in the rest of the country, not what we want during our 5 months off from them.

Edited January 16, 2023 by SteamyTea

[andyscotland]

52 minutes ago, jayc89 said:

Perhaps I'm missing something obvious. We hear time and time again from the energy companies that the imposed windfall tax is affecting investment in renewables. Surely if these companies pumped money into renewables, this would be pre-tax money, meaning their profits wouldn't look so large, as its been reinvested in their business, and therefore there would be less for any windfall tax to deduct from.

 

Am I missing something?

 

Broadly speaking (there are always exceptions!) taxable profit is on turnover less direct running expenses for the year.

 

If the business buys/invests in anything long-term (whether a car, factory, wind turbine, etc) then the cost of this is spread over the accounts and tax deductions for the next several years depending on the expected usable life of the asset.

 

This does usually come out in the wash eventually (including you can end up getting a tax rebate in a future year if turnover/profit drops but you're still "paying off" the asset you bought years ago). But it may not balance when tax rates change or windfall taxes come into play.

 

And in the short term you can definitely have a situation where a company theoretically has a huge taxable profit but doesn't actually have cash in the bank because they've invested it all in long-term assets.

 

Of course I doubt that applies to energy companies!

 

And if the government was actually concerned they could always add a capital allowances rule to enable a company to set 100% of renewables investment against tax in the year it was incurred. There are already different allowance rates to incentivise investment in particular types of assets - e.g. electric cars & goods vehicles.

[Temp]

Many developers are international companies. They can choose where to invest. In the UK where there is are high taxes or elsewhere where there aren't?

 

I also suspect the supply of wind turbines is limited so that may mean they want to put them where they will be most profitable.

[Ralph]

I think 2022/2023 is the first time Shell, for example have paid corporation tax on North Sea operations for five years. In fact I think the government paid them £100s of millions. BP is in the same sort of position. At the same time shareholders get £billions in dividends.