EGL34000 - Groups: identifying the qualifying period of an EGL group

The charge to EGL is based on the “exceptional generation receipts” in a “qualifying period”, that period is also used to assess whether an undertaking exceeds the levy threshold.

For a single company the qualifying period is based on its corporation tax accounting period, although the qualifying period may be shorter, say on the commencement of the EGL or where the company only becomes liable after commencement, see F(2)A23/S280(2) & (3).

In a group context the EGL qualifying period is determined by the corporation tax accounting period of the lead member, F(2)A23/S288(1).  The lead member of a group may change and the replacement (“B”) may not have the same accounting period as the original lead member (“A”).  Where that happens the rule is that one qualifying period will end and another begin, F(2)A23/S288(6).

For example: lead member A has an accounting period ending on 31 December 2026, it ceases to be the lead member on 1 September 2026 to be replaced by B which has an accounting period that ends on 30 June 2027.  The result is that the group’s qualifying periods for EGL are 1 January to 31 August 2026 and 1 September 2026 to 30 June 2027, by reference to A and B’s respective accounting periods. 

Examples of where such a change in lead member could arise where there is no nomination in place are: where the principal member of one group becomes a subsidiary of another or where a lead member that is not the principal member is sold and ceases to be a member of its original group.

The way the rules work means that qualifying period for EGL will always fall within the lead company’s corporation tax accounting period although it may not coincide with the whole accounting period.  This means that the EGL liability of the lead company is to be reported in that company’s corporation tax self-assessment return for the relevant accounting period. 

This default rule may be displaced where the change of lead member results from the nomination of a new group company, EGL34000 explains how the qualifying periods are determined where that happens.