Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 24 November 2023 to Question 92053, whether he has made an assessment of the potential impact of Investment Allowances on the Energy Profit Levy on tax revenue.

The Energy Profits Levy (EPL) was introduced in May 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 per cent, effective from 1 January 2023. The levy has also been extended until 31 March 2028.

The Government has always sought to balance delivering a fair return for the UK from the use of its resources while providing the right conditions to attract investment in the North Sea that is key to support domestic jobs and the nation’s energy security. That is why the levy includes and will retain a new investment allowance, which means for every £1 businesses invest they will overall get a tax saving of around 91p.

The Office for Budget Responsibility’s (OBR) forecast at Autumn Statement 2022 estimates revenues from EPL are expected to be £41.6 billion between 2022-23 and 2027-28. This is inclusive of the impact of the levy’s investment allowance.