Offshore Industry: Taxation

Treasury written question – answered on 6th June 2022.

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Photo of Rachel Reeves Rachel Reeves Shadow Chancellor of the Exchequer

To ask the Chancellor of the Exchequer, with reference to the Energy Profits Levy, Technical Note, published on 26 May 2022, if he will place in the Library the figures for the total estimated amount the Energy Profits Levy will be reduced in (a) 2022-23 and (b) each of the years of the forecast horizon to 2025-26 as a result of (i) investment expenditure within the investment incentive allowance and (ii) loss relief.

Photo of Helen Whately Helen Whately The Exchequer Secretary

As set out in “Energy Profits Levy Factsheet - 26 May 2022”, the new Energy Profits Levy will raise around £5 billion over the next year.

As part of the levy a new tax relief is being introduced to encourage firms to invest in the UK. The new 80% Investment Allowance will mean businesses will overall get a 91p tax saving for every £1 they invest.The Government expects the combination of the levy and this investment allowance to lead to an overall increase in investment, and the OBR will take account of this policy in their next forecast.To appropriately tax the extraordinary profits, companies will not be able to offset previous losses or decommissioning expenditure against profits subject to the levy.A full costing of the policy will be certified by the independent Office for Budget Responsibility at the Budget.

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