Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will take steps to convene a roundtable for independent oil companies operating in the North Sea on the potential impact of the Energy Profits Levy on investment in the UK.

The Energy Profits Levy (EPL) was introduced in May 2022 in response to sharp increases in oil and gas prices over the past year. At the Autumn Statement 2022, the Chancellor announced that the rate of the levy would rise by ten percentage points to 35% from 1 January 2023 and will last until 31 March 2028.

The government has been clear it wants to see the oil and gas sector reinvest its profits to support the economy, jobs and the UK’s energy security. That is why the levy includes a new investment allowance, ensuring that for every £1 an oil and gas company spends, they can claim around 91p in tax relief for most types of investment expenditure.

For every £100 an oil and gas company invests to decarbonise upstream oil and gas production, they will be able to deduct £109.25 when calculating their levy profits. This provides an immediate and significant fiscal incentive to reinvest profits in the UK.

The government published a Tax Information and Impact Note (TIIN) on the Energy Profits Levy changes announced at the Autumn Statement. This is available at: https://www.gov.uk/government/publications/changes-to-the-energy-oil-and-gas-profits-levy/energy-oil-and-gas-profits-levy. The TIIN sets out that the levy is not expected to have a significant macroeconomic impact on the level of business investment.

In December 2022, the Chancellor attended a roundtable with representatives from the oil and gas sector. The government has regular engagement with a range of stakeholders, including independent oil and gas companies operating in the North Sea, and I have also met with representatives of North Sea Oil and Gas.