Following calls for a windfall tax on oil and gas companies, the Chancellor has announced a 25% energy profits levy, set to raise £5bn in year one, effective from today
The measure is designed to help fund more cost-of-living support for UK families and is a 25% surcharge on the extraordinary profits the oil and gas sector is making.
Chancellor Rishi Sunak said: ‘The oil and gas sector is making extraordinary profits as a result of surging global commodity prices. I am sympathetic to the argument of taxing those profits but as ever there is a sensible middle ground.
‘The temporary energy profits levy will be coupled with a new investment allowance similar to the super deduction so companies have an incentive to reinvest.
‘The energy profits levy will be a rate of 25% tax on profits. With the new investment allowance this will nearly double the investment relief for oil and gas companies. We understand also that certain parts of the electricity generation industry are making extraordinary profits. We are consulting with the power generation companies to make sure electricity prices are fairer to ensure that the price paid for electricity is more reflective of the costs of production.
