National Grid ends year as expected, warns of UK tax impact

The FTSE 100 energy network operator said the UK government's introduction of 'full expensing' tax relief for capital expenditure from 1 April 2023, to 31 March 2026 was not expected to have an impact on National Grid's results for the year ended 31 March.

It was, however, expected to impact underlying earnings in the 2024 to 2026 fiscal periods.

Although the tax relief was economically neutral for National Grid, expected lower cash tax payable would result in reduced revenues in UK electricity transmission and UK electricity distribution, leading to a “broadly neutral” cash position.

Those impacts, coupled with a corresponding increase in IFRS deferred tax liabilities, would result in a net adverse impact on both statutory and underlying earnings, the company explained.

“Taking this into account, the group still expects to deliver underlying earnings per share growth of 6% to 8% CAGR across the five-year period from 2022 to 2026, but this is now expected to be towards the lower end of this range,” the board said in its statement.

“Further updates will be provided with our detailed 2024 financial year guidance, as part of full-year results.”

At 1111 BST, shares in National Grid were down 0.66% at 1,136.5p.

Reporting by Josh White for Sharecast.com.