National Grid PLC (LSE:NG.) has revealed that government tax treatments, which came into effect earlier this month, are expected to have a "net adverse impact" on its underlying earnings in years to come.
The UK's introduction of "full expensing" relief for capital expenditure, which runs to March 2026 is set to be "economically neutral" overall to National Grid.
However, the company said the rule changes will result in reduced revenues in UK Electricity Transmission and UK Electricity Distribution businesses, alongside a corresponding increase in deferred tax liabilities calculated to IFRS standards.
These impacts will result in a net adverse effect on statutory and underlying earnings but are not expected to affect the company's results for the year just gone.
While National Grid still expects to deliver underlying earnings per share growth on a compound annual basis of 6-8% from 2022 to 2026, the figure will be towards the lower end of this range.