Revenues from the energy profits levy (EPL) continue on a downward trend, according to recent data from the Office for National Statistics. EPL receipts were £2.6bn in the financial year to 31 March 2023 (HMRC statistics), but RSM reports that monthly data from the ONS, reflecting no change for a third consecutive month, shows a steady decline in annual terms, reflecting a 29% drop compared to the same period in 2023.
Commenting on the findings, Sheena McGuinness, Head of Renewables and Cleantech at RSM UK, said: ‘The historical trends support concerns about the shrinking tax base and cast further doubt on the assertion of a £1.2bn per annum uplift in windfall tax revenues which the government have ear marked to fund GB Energy. If plans to extend and increase the Energy Profit Levy to 38% are brought in by the government, we might see a short-term increase in revenues, but the impact on future investment and behavioural shift could result in further corrosion of the tax base...’
OEUK, representative body for the UK offshore energy industry, recently published its own data suggesting that a strengthened energy profits levy, in line with current Government proposals, could create a loss in economic value of £13bn compared to the status quo position under the existing windfall tax regime – resulting from an expected reduction in investment by oil and gas producers in UK projects. Although, it remains to be seen in practice what effect the changes have on investment by industry.
Revenues from the energy profits levy (EPL) continue on a downward trend, according to recent data from the Office for National Statistics. EPL receipts were £2.6bn in the financial year to 31 March 2023 (HMRC statistics), but RSM reports that monthly data from the ONS, reflecting no change for a third consecutive month, shows a steady decline in annual terms, reflecting a 29% drop compared to the same period in 2023.
Commenting on the findings, Sheena McGuinness, Head of Renewables and Cleantech at RSM UK, said: ‘The historical trends support concerns about the shrinking tax base and cast further doubt on the assertion of a £1.2bn per annum uplift in windfall tax revenues which the government have ear marked to fund GB Energy. If plans to extend and increase the Energy Profit Levy to 38% are brought in by the government, we might see a short-term increase in revenues, but the impact on future investment and behavioural shift could result in further corrosion of the tax base...’
OEUK, representative body for the UK offshore energy industry, recently published its own data suggesting that a strengthened energy profits levy, in line with current Government proposals, could create a loss in economic value of £13bn compared to the status quo position under the existing windfall tax regime – resulting from an expected reduction in investment by oil and gas producers in UK projects. Although, it remains to be seen in practice what effect the changes have on investment by industry.
