On 28 February 2026, strikes were launched against Iran. Within days, the Strait of Hormuz, the channel that normally carries around a fifth of the world’s oil and LNG, was effectively closed. Brent crude jumped from roughly $70 a barrel to peaks near $120. UK wholesale gas prices rose by around 75% in under a month.
Because of the lag built into Ofgem’s price cap, households didn’t feel it immediately. However, on 1 July, the cap rose 13%, adding around £220 to a typical dual-fuel bill. It’s not the first time in recent years that UK households have taken a direct hit from a conflict thousands of miles away.
The pattern is structural, not bad luck. The UK imports around a third of its gas and pays the international price for it regardless of where it comes from. Gas-fired generation continues to set the marginal wholesale electricity price for much of the time. So when gas spikes, everything spikes with it, including petrol, heating, and the electricity bill – even for households that never touch a gas boiler.
That structural exposure is exactly why the policy response has settled on the same answer every time: less gas dependency, more decentralised, self-generated power. It’s also why, according to the UK Government, March 2026 saw the highest month of UK solar installations since 2012, taking total UK installations past 2 million. Households have been responding to the same signal as governments.
The home is becoming an energy system
A decade ago, most households were simply consumers of electricity. Today, many generate it, store it, and increasingly decide when to use it. A modern home may run rooftop solar, a battery, an EV charger and a heat pump. Each adds value individually. Together they create complexity. That complexity is increasingly being managed not by the homeowner, but by software. Whoever owns that software layer owns the customer relationship, which is where the real value in this market is starting to sit.
Decentralised generation solves half the problem. The other half is demand-side response, using flexibility, not just generation, to reduce exposure to volatile and expensive grid electricity. For years demand-side response has been framed as a grid-level, industrial-scale story: aggregators, Virtual Power Plants (VPPs) and large commercial sites with half-hourly meters. It’s not where most of the current momentum actually sits.
The more interesting shift is happening inside individual homes. This isn’t a niche behaviour. Battery storage is increasingly being installed alongside new rooftop solar systems. The missing piece isn’t hardware adoption, it’s the software layer that makes that hardware behave as one coordinated system rather than four independent devices.
That’s what’s changing. Home Energy Management Systems (HEMS) are starting to treat solar, storage, heat pumps and EV charging as one coordinated system. The system learns a household’s usage pattern, tracks solar forecasts and wholesale price signals, and makes decisions for now and the coming hours, be they charging the battery when prices are low, running the dishwasher off-peak or using stored solar rather than importing at a price spike.
Interest is already responding to exactly the macro trigger this article opened with. One installer reported website traffic increasing by more than 60% in a single week this spring, as households searched for ways to reduce their exposure to wholesale price volatility and future geopolitical shocks.
Why this matters more than it looks
Data, not hardware, is the key to unlocking efficiency and savings. The panels, batteries and heat pumps have existed for years. What’s new is the ability to model, forecast and act on a household’s energy behaviour in real time, turning static assets into a coordinated, price-responsive system. That is demand-side response, delivered at the smallest possible scale: one house at a time, multiplied across hundreds of thousands of installations.
The market is currently fragmented, but it’s also the kind of market structure that tends to consolidate fast once the underlying demand is proven.
The investment case
For equity investors, home energy orchestration has a set of characteristics worth taking seriously:
It converts hardware into recurring revenue: Solar, batteries and heat pumps are fundamentally commoditised, one-off capex sales. A home orchestration layer on top – whether through subscription fees, share-of-savings, data-driven services – turns a single install into an ongoing customer relationship, with the far better margin profile.
Data is a real moat: Years of half-hourly consumption, battery cycling, weather response and tariff optimisation create proprietary operational datasets that improve forecasting. A platform that has learned this behaviour across thousands of households has a switching-cost advantage that’s genuinely hard to replicate. It’s the same defensibility thesis that has made VPP and Distributed Energy Resource aggregator platforms attractive at grid scale, just pushed down to a household level with a far larger addressable base.
Fragmentation is the opportunity, not just the risk: A market of closed, vendor-specific platforms is a textbook setup for consolidation: bringing together regional installers and software providers, standardising the technology layer and building a scaled platform with characteristics that strategic buyers and investors have historically been willing to value at a premium. But consolidation is only one route to value creation. Equally compelling are independent software platforms that establish themselves as the orchestration layer across a growing installer ecosystem. Through selective acquisitions, channel partnerships and expanding customer adoption, these businesses have the potential to scale rapidly, build large bases of recurring software revenue and become valuable platforms in their own right.
The tailwind is structural, not cyclical: Falling battery costs and rising heat pump and EV adoption push households toward orchestration regardless of any single year’s energy prices. That matters, because an investment thesis built purely on “prices are high right now” is not a strong one. As adoption increases, so too does the stickiness of customers and revenues.
The bigger picture
Every time a conflict thousands of miles away pushes up a UK household’s bill, the underlying lesson is the same one being learned by governments and increasingly by consumers: import less, generate more, and use what you have more intelligently. Data is what makes the third part possible. Households that once represented the end of the grid are becoming active participants within it and the platforms coordinating that behaviour may prove to be some of the most valuable assets created during the energy transition.
On 28 February 2026, strikes were launched against Iran. Within days, the Strait of Hormuz, the channel that normally carries around a fifth of the world’s oil and LNG, was effectively closed. Brent crude jumped from roughly $70 a barrel to peaks near $120. UK wholesale gas prices rose by around 75% in under a month.
Because of the lag built into Ofgem’s price cap, households didn’t feel it immediately. However, on 1 July, the cap rose 13%, adding around £220 to a typical dual-fuel bill. It’s not the first time in recent years that UK households have taken a direct hit from a conflict thousands of miles away.
The pattern is structural, not bad luck. The UK imports around a third of its gas and pays the international price for it regardless of where it comes from. Gas-fired generation continues to set the marginal wholesale electricity price for much of the time. So when gas spikes, everything spikes with it, including petrol, heating, and the electricity bill – even for households that never touch a gas boiler.
That structural exposure is exactly why the policy response has settled on the same answer every time: less gas dependency, more decentralised, self-generated power. It’s also why, according to the UK Government, March 2026 saw the highest month of UK solar installations since 2012, taking total UK installations past 2 million. Households have been responding to the same signal as governments.
The home is becoming an energy system
A decade ago, most households were simply consumers of electricity. Today, many generate it, store it, and increasingly decide when to use it. A modern home may run rooftop solar, a battery, an EV charger and a heat pump. Each adds value individually. Together they create complexity. That complexity is increasingly being managed not by the homeowner, but by software. Whoever owns that software layer owns the customer relationship, which is where the real value in this market is starting to sit.
Decentralised generation solves half the problem. The other half is demand-side response, using flexibility, not just generation, to reduce exposure to volatile and expensive grid electricity. For years demand-side response has been framed as a grid-level, industrial-scale story: aggregators, Virtual Power Plants (VPPs) and large commercial sites with half-hourly meters. It’s not where most of the current momentum actually sits.
The more interesting shift is happening inside individual homes. This isn’t a niche behaviour. Battery storage is increasingly being installed alongside new rooftop solar systems. The missing piece isn’t hardware adoption, it’s the software layer that makes that hardware behave as one coordinated system rather than four independent devices.
That’s what’s changing. Home Energy Management Systems (HEMS) are starting to treat solar, storage, heat pumps and EV charging as one coordinated system. The system learns a household’s usage pattern, tracks solar forecasts and wholesale price signals, and makes decisions for now and the coming hours, be they charging the battery when prices are low, running the dishwasher off-peak or using stored solar rather than importing at a price spike.
Interest is already responding to exactly the macro trigger this article opened with. One installer reported website traffic increasing by more than 60% in a single week this spring, as households searched for ways to reduce their exposure to wholesale price volatility and future geopolitical shocks.
Why this matters more than it looks
Data, not hardware, is the key to unlocking efficiency and savings. The panels, batteries and heat pumps have existed for years. What’s new is the ability to model, forecast and act on a household’s energy behaviour in real time, turning static assets into a coordinated, price-responsive system. That is demand-side response, delivered at the smallest possible scale: one house at a time, multiplied across hundreds of thousands of installations.
The market is currently fragmented, but it’s also the kind of market structure that tends to consolidate fast once the underlying demand is proven.
The investment case
For equity investors, home energy orchestration has a set of characteristics worth taking seriously:
It converts hardware into recurring revenue: Solar, batteries and heat pumps are fundamentally commoditised, one-off capex sales. A home orchestration layer on top – whether through subscription fees, share-of-savings, data-driven services – turns a single install into an ongoing customer relationship, with the far better margin profile.
Data is a real moat: Years of half-hourly consumption, battery cycling, weather response and tariff optimisation create proprietary operational datasets that improve forecasting. A platform that has learned this behaviour across thousands of households has a switching-cost advantage that’s genuinely hard to replicate. It’s the same defensibility thesis that has made VPP and Distributed Energy Resource aggregator platforms attractive at grid scale, just pushed down to a household level with a far larger addressable base.
Fragmentation is the opportunity, not just the risk: A market of closed, vendor-specific platforms is a textbook setup for consolidation: bringing together regional installers and software providers, standardising the technology layer and building a scaled platform with characteristics that strategic buyers and investors have historically been willing to value at a premium. But consolidation is only one route to value creation. Equally compelling are independent software platforms that establish themselves as the orchestration layer across a growing installer ecosystem. Through selective acquisitions, channel partnerships and expanding customer adoption, these businesses have the potential to scale rapidly, build large bases of recurring software revenue and become valuable platforms in their own right.
The tailwind is structural, not cyclical: Falling battery costs and rising heat pump and EV adoption push households toward orchestration regardless of any single year’s energy prices. That matters, because an investment thesis built purely on “prices are high right now” is not a strong one. As adoption increases, so too does the stickiness of customers and revenues.
The bigger picture
Every time a conflict thousands of miles away pushes up a UK household’s bill, the underlying lesson is the same one being learned by governments and increasingly by consumers: import less, generate more, and use what you have more intelligently. Data is what makes the third part possible. Households that once represented the end of the grid are becoming active participants within it and the platforms coordinating that behaviour may prove to be some of the most valuable assets created during the energy transition.
Andy Burnham, heir presumptive to the Labour Party and Number 10 (wherever that might be in the future) has openly expressed support for the equalisation of Capital Gains Tax with income tax rates. Whether he will actually implement this change is anyone’s guess. However, as a long term Corporate Finance (not tax!) adviser, uncertainty around the CGT regime has been a source of periodic upheaval and client anxiety.
For those business owners who have already decided that they want to exit, it might accelerate their timescales and create some urgency. For others, it might push the timing for an exit up the agenda; albeit a good business exit process usually takes months not weeks and increasingly tax changes are implemented on the day of the budget concerned, so time to plan can be a luxury and big decisions made in haste to accommodate expected tax changes are sometimes be repented at leisure.
Prior to 1998 CGT was, in broad terms, paid at an individual’s income tax rate, with indexation and retirement relief (in many cases materially) softening the impact. In 1998, however, the new Labour Government introduced Taper Relief, including Business AssetTaper Relief (BATR), which was designed to incentivise the holding of assets and penalise “flipping”.
For business assets, BATR (in simple terms) reduced the percentage of the gain that was taxable, with the maximum relief reached after two years of qualifying ownership. At that point, only 25% of the gain was chargeable, so a higher‑rate taxpayer on 40% would pay an effective rate of 10%. For non‑business assets, taper relief was slower and the maximum 40% reduction applied only after ten years. The calculation for assets acquired before April 1998 also involved indexation relief on the base cost, which compensated for the effect of inflation up to that date.
This arrangement was complex and drove a great deal of tax planning in the attempt to arrive at the lowest level of gain. For example, the use of loan notes to defer the crystallisation of a gain could secure an additional year or two of relief and was a standard tax planning device.
This complexity ultimately led the government to abolish Taper Relief, which was not only hard for taxpayers to understand, but also hard for HMRC to administer. The arrangements also incentivised the holding of assets for as long as possible, even when this was economically inefficient, and saw investors delaying business sales (and therefore tax realisations) to reduce the amounts payable.
In 2008 the Government introduced a flat rate of Capital Gains Tax for most forms of asset at 18%. The goal was to make the tax more straightforward and transparent. However, for those shareholders who had held their business shares for a long time, 18% was a considerably higher effective rate than they had been used to paying. Take for example the sale of the shares in a business by a long‑term shareholder generating a gain of £5m. Under BATR the tax on the gain (unindexed) would have been £500,000, whereas the new Capital Gains Tax rate would lead to tax payable on the same gain of £900,000.
The shareholding community were understandably vocally unhappy with this outcome and so the Government of the time introduced Entrepreneurs’ Relief (ER), which allowed shareholders who had held their shares for at least 1 year (later extended to two years), were employees or officers of the business and owned at least 5% of the company (including voting rights) to tax their gains at only 10% on a lifetime limit that was steadily increased to reach £10m by 2011. In the above example and assuming the conditions were met and the lifetime limit not already used, the tax due on the £5m gain would be back at the £500,000 payable under BATR.
The Entrepreneurs’ Relief regime lasted for twelve years, during which time most business vendors were comfortable with the generous allowance and there was a material reduction in the level of tax planning and structuring that had previously been rife. It was in place long enough to encourage the establishment of incentive schemes designed to bring management teams into the ER regime to take advantage of the gap between the ER rate of 10% and the standard CGT rate (which for higher‑rate taxpayers on most non‑residential assets later rose to 20%), let alone the highest income tax rate which peaked between 2010 and 2013 at 50%, reducing thereafter to the current 45%.
In 2020 the level of gain that benefited from the 10% rate was reduced hugely from £10m to £1m and the name of the relief was changed from Entrepreneurs’ Relief to Business Asset Disposal Relief (BADR). Despite the reduced generosity of the allowance attributed to business vendors, the general (higher) CGT rate of 20% was still materially lower than Income Tax rates and the advantage of creating a capital disposal therefore remained very tangible. The focus of tax advisers shifted to ensuring that capital treatment was assured on business disposals, and most vendors accepted the level of CGT due without undertaking planning to manage it. On our example £5m gain, the CGT for a qualifying vendor would be £900,000 (10% on the first £1m and 20% on the remaining £4m).
In 2024, changes were announced to increase the general higher CGT rate from 20% to 24% and to increase the rate applicable to the first £1m of qualifying gains for business vendors from 10% to 14% from April 2025 and then to 18% from April 2026. On the same illustrative £5m gain, a qualifying business vendor would, under those rates, now pay £1.14m of tax (18% on £1m and 24% on £4m), the highest tax burden on such a transaction since pre 1998.
If a future government were to enact an equalisation of CGT and Income Tax then, assuming that a business owner was paying Income Tax at the additional rate, the tax payable (without any new allowances or reliefs being introduced for entrepreneurs) on the £5m gain would be £2.25m, almost twice the amount due under the post‑2024 regime and four and a half times the amount due under the Entrepreneurs’ Relief regime until 2020.
So, what would be the potential impact of such a change?
It has been a long time since we had an economy which didn’t in some way reward business ownership with lower effective tax rates on capital gains. During that time the market economy in the UK has evolved to take advantage of the benefits of value creation and capital growth.
In the short term, I have no doubt that the impact of such a change would be to halt M&A in the UK in its tracks to give time to think and in the hope that a subsequent change of regime would reverse the policy to continue to reward risk‑taking shareholders. For most business vendors there is no imperative about the timing of a business sale and previous threatened changes have demonstrably resulted in accelerated selling followed by a pause.
In any case entrepreneurs and their investors would no longer need to focus on capital growth in the way that they historically have. If a capital event were to be taxed in precisely the same way as income, then business owners might as well just draw all the cash in their business as they go along. Without the capital tax advantage of creating business value there is no benefit in deferred gratification and the reward for investing now to build future value is a riskier equation for sure.
The potential for incentivising management to remain with the business through a transaction would be inherently limited compared to the equity‑based incentive schemes available today which would likely damage earlier‑stage/high‑growth‑potential businesses that would have to pay competitive salaries without the capacity for capital value creation.
Many other countries have capital gains tax rates that are similar or equal to income tax rates and investment and growth are demonstrably achievable in these regimes. However, they all have considerably lower income tax rates than the UK and in some (Germany and the Nordics) there is a much greater tradition of long‑term family or employee share ownership. It is also usually the case that the prices paid for businesses in these jurisdictions are less aggressive than in the UK or US.
If the equalisation of rates were to be accompanied by strong support for entrepreneurs, effective arrangements and incentives to support internal share markets, an overall reduced rate of income tax and a plan to replace equity‑based incentives with income‑based ones that didn’t prejudice the current generation of management teams, then conceivably the strategy could result eventually in a more stable economy where the culture was about retention and growth and not about valuable exits. It is undeniably the case, for example, that Private Equity still thrives in Germany, France and the Nordics where alignment of tax rates is much closer than in the UK.
I see little prospect of this headline policy being accompanied by the kind of support and planning it would require, however. A more likely scenario is paralysis in M&A, a return to aggressive tax planning including offshoring, and a shift to less entrepreneurial investment in UK businesses as strategies turn to cash extraction. I am not sure that it would deter the establishment of new businesses, which is rarely a tax‑driven decision, but it would certainly make it harder for new businesses to attract high‑quality senior staff without the carrot of future capital gains.
Whatever one’s politics, seismic tax changes are destabilising and potentially have unintended consequences. Observing how the tax reliefs available to entrepreneurs have already more than halved since 2020, it is guesswork where their tolerance for being taxed ends.
Andy Burnham, heir presumptive to the Labour Party and Number 10 (wherever that might be in the future) has openly expressed support for the equalisation of Capital Gains Tax with income tax rates. Whether he will actually implement this change is anyone’s guess. However, as a long term Corporate Finance (not tax!) adviser, uncertainty around the CGT regime has been a source of periodic upheaval and client anxiety.
For those business owners who have already decided that they want to exit, it might accelerate their timescales and create some urgency. For others, it might push the timing for an exit up the agenda; albeit a good business exit process usually takes months not weeks and increasingly tax changes are implemented on the day of the budget concerned, so time to plan can be a luxury and big decisions made in haste to accommodate expected tax changes are sometimes be repented at leisure.
Prior to 1998 CGT was, in broad terms, paid at an individual’s income tax rate, with indexation and retirement relief (in many cases materially) softening the impact. In 1998, however, the new Labour Government introduced Taper Relief, including Business AssetTaper Relief (BATR), which was designed to incentivise the holding of assets and penalise “flipping”.
For business assets, BATR (in simple terms) reduced the percentage of the gain that was taxable, with the maximum relief reached after two years of qualifying ownership. At that point, only 25% of the gain was chargeable, so a higher‑rate taxpayer on 40% would pay an effective rate of 10%. For non‑business assets, taper relief was slower and the maximum 40% reduction applied only after ten years. The calculation for assets acquired before April 1998 also involved indexation relief on the base cost, which compensated for the effect of inflation up to that date.
This arrangement was complex and drove a great deal of tax planning in the attempt to arrive at the lowest level of gain. For example, the use of loan notes to defer the crystallisation of a gain could secure an additional year or two of relief and was a standard tax planning device.
This complexity ultimately led the government to abolish Taper Relief, which was not only hard for taxpayers to understand, but also hard for HMRC to administer. The arrangements also incentivised the holding of assets for as long as possible, even when this was economically inefficient, and saw investors delaying business sales (and therefore tax realisations) to reduce the amounts payable.
In 2008 the Government introduced a flat rate of Capital Gains Tax for most forms of asset at 18%. The goal was to make the tax more straightforward and transparent. However, for those shareholders who had held their business shares for a long time, 18% was a considerably higher effective rate than they had been used to paying. Take for example the sale of the shares in a business by a long‑term shareholder generating a gain of £5m. Under BATR the tax on the gain (unindexed) would have been £500,000, whereas the new Capital Gains Tax rate would lead to tax payable on the same gain of £900,000.
The shareholding community were understandably vocally unhappy with this outcome and so the Government of the time introduced Entrepreneurs’ Relief (ER), which allowed shareholders who had held their shares for at least 1 year (later extended to two years), were employees or officers of the business and owned at least 5% of the company (including voting rights) to tax their gains at only 10% on a lifetime limit that was steadily increased to reach £10m by 2011. In the above example and assuming the conditions were met and the lifetime limit not already used, the tax due on the £5m gain would be back at the £500,000 payable under BATR.
The Entrepreneurs’ Relief regime lasted for twelve years, during which time most business vendors were comfortable with the generous allowance and there was a material reduction in the level of tax planning and structuring that had previously been rife. It was in place long enough to encourage the establishment of incentive schemes designed to bring management teams into the ER regime to take advantage of the gap between the ER rate of 10% and the standard CGT rate (which for higher‑rate taxpayers on most non‑residential assets later rose to 20%), let alone the highest income tax rate which peaked between 2010 and 2013 at 50%, reducing thereafter to the current 45%.
In 2020 the level of gain that benefited from the 10% rate was reduced hugely from £10m to £1m and the name of the relief was changed from Entrepreneurs’ Relief to Business Asset Disposal Relief (BADR). Despite the reduced generosity of the allowance attributed to business vendors, the general (higher) CGT rate of 20% was still materially lower than Income Tax rates and the advantage of creating a capital disposal therefore remained very tangible. The focus of tax advisers shifted to ensuring that capital treatment was assured on business disposals, and most vendors accepted the level of CGT due without undertaking planning to manage it. On our example £5m gain, the CGT for a qualifying vendor would be £900,000 (10% on the first £1m and 20% on the remaining £4m).
In 2024, changes were announced to increase the general higher CGT rate from 20% to 24% and to increase the rate applicable to the first £1m of qualifying gains for business vendors from 10% to 14% from April 2025 and then to 18% from April 2026. On the same illustrative £5m gain, a qualifying business vendor would, under those rates, now pay £1.14m of tax (18% on £1m and 24% on £4m), the highest tax burden on such a transaction since pre 1998.
If a future government were to enact an equalisation of CGT and Income Tax then, assuming that a business owner was paying Income Tax at the additional rate, the tax payable (without any new allowances or reliefs being introduced for entrepreneurs) on the £5m gain would be £2.25m, almost twice the amount due under the post‑2024 regime and four and a half times the amount due under the Entrepreneurs’ Relief regime until 2020.
So, what would be the potential impact of such a change?
It has been a long time since we had an economy which didn’t in some way reward business ownership with lower effective tax rates on capital gains. During that time the market economy in the UK has evolved to take advantage of the benefits of value creation and capital growth.
In the short term, I have no doubt that the impact of such a change would be to halt M&A in the UK in its tracks to give time to think and in the hope that a subsequent change of regime would reverse the policy to continue to reward risk‑taking shareholders. For most business vendors there is no imperative about the timing of a business sale and previous threatened changes have demonstrably resulted in accelerated selling followed by a pause.
In any case entrepreneurs and their investors would no longer need to focus on capital growth in the way that they historically have. If a capital event were to be taxed in precisely the same way as income, then business owners might as well just draw all the cash in their business as they go along. Without the capital tax advantage of creating business value there is no benefit in deferred gratification and the reward for investing now to build future value is a riskier equation for sure.
The potential for incentivising management to remain with the business through a transaction would be inherently limited compared to the equity‑based incentive schemes available today which would likely damage earlier‑stage/high‑growth‑potential businesses that would have to pay competitive salaries without the capacity for capital value creation.
Many other countries have capital gains tax rates that are similar or equal to income tax rates and investment and growth are demonstrably achievable in these regimes. However, they all have considerably lower income tax rates than the UK and in some (Germany and the Nordics) there is a much greater tradition of long‑term family or employee share ownership. It is also usually the case that the prices paid for businesses in these jurisdictions are less aggressive than in the UK or US.
If the equalisation of rates were to be accompanied by strong support for entrepreneurs, effective arrangements and incentives to support internal share markets, an overall reduced rate of income tax and a plan to replace equity‑based incentives with income‑based ones that didn’t prejudice the current generation of management teams, then conceivably the strategy could result eventually in a more stable economy where the culture was about retention and growth and not about valuable exits. It is undeniably the case, for example, that Private Equity still thrives in Germany, France and the Nordics where alignment of tax rates is much closer than in the UK.
I see little prospect of this headline policy being accompanied by the kind of support and planning it would require, however. A more likely scenario is paralysis in M&A, a return to aggressive tax planning including offshoring, and a shift to less entrepreneurial investment in UK businesses as strategies turn to cash extraction. I am not sure that it would deter the establishment of new businesses, which is rarely a tax‑driven decision, but it would certainly make it harder for new businesses to attract high‑quality senior staff without the carrot of future capital gains.
Whatever one’s politics, seismic tax changes are destabilising and potentially have unintended consequences. Observing how the tax reliefs available to entrepreneurs have already more than halved since 2020, it is guesswork where their tolerance for being taxed ends.
