A new 25% tax on the UK upstream oil and gas industry is being introduced with effect from 26 March 2022, to be known as the energy profits levy. The levy is intended to apply until 31 December 2025. It will be charged on the same profits that are already subject to ring fence corporation tax (RFCT) and supplementary charge, giving a combined rate of 65%. The RFCT profits are, however, adjusted by the disallowance of any loss relief, financing costs, and decommissioning costs. A new investment allowance at 80% of qualifying expenditure will be available to reduce profits subject to the levy.
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A new 25% tax on the UK upstream oil and gas industry is being introduced with effect from 26 March 2022, to be known as the energy profits levy. The levy is intended to apply until 31 December 2025. It will be charged on the same profits that are already subject to ring fence corporation tax (RFCT) and supplementary charge, giving a combined rate of 65%. The RFCT profits are, however, adjusted by the disallowance of any loss relief, financing costs, and decommissioning costs. A new investment allowance at 80% of qualifying expenditure will be available to reduce profits subject to the levy.
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