Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the potential revenue from removal of the Investment Allowance in the Energy Profits Levy.

The Energy Profits Levy was introduced from 26 May in response to sharp increases in oil and gas prices. It is an additional 25% surcharge on UK oil and gas profits. This is on top of the existing 40% headline rate of tax and takes the combined rate of tax on profits to 65%, currently more than triple the rate paid by other businesses.

The Net Zero Strategy highlighted the North Sea basin has a key role to play in contributing to the transition towards net zero, and the Government has been clear that 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 80% investment allowance to support capital expenditure on oil and gas related activities purposes. It means the total tax relief on investment nearly doubles - for every £1 businesses invest they will overall get a 91p tax saving.

The Government has calculated that it expects the levy to raise over £7 billion in 2022/23, and around £28 billion over the period to 2025/26. This is inclusive of the impact of investment expenditure relief.

All taxes are kept under review and any changes are considered and announced by the Chancellor.