Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact on tax revenues to the Exchequer in future North Sea profits reporting periods, until 31 December 2025, of the Relief for investment expenditure measures in the Energy (Oil and Gas) Profits Levy Act.

The Energy Profits Levy (EPL) was introduced from 26 May, in response to sharp increases in oil and gas prices and to help fund cost of living support for UK households. It is an additional 25 per cent surcharge on UK oil and gas profits on top of the existing 40 per cent headline rate of tax, taking the combined rate of tax on profits to 65 per cent, more than triple the rate paid by other businesses.

The Government has been clear that it wants to see the oil and gas sector reinvest their profits in North Sea oil and gas to support the economy, jobs, and the UK’s energy security. That is why, within the EPL, a new ‘super-deduction’ style relief has been introduced to encourage firms to invest in oil and gas extraction in the UK. The new 80 per cent investment allowance means businesses get an overall 91p tax saving for every £1 they invest.

The Government has calculated that it expects the EPL to raise over £7 billion in 2022-23, and around £28 billion over the period to 2025-26. This is based on forecast oil and gas prices and is inclusive of the impact of investment expenditure relief.