06 Jun 2024

EPL instalment interest

Worth checking the position  When EPL was introduced with effect from May 2022 there was some confusion as to how exactly the regime would apply. The point that appears to have been missed when the legislation was introduced was that the status of a company for the purposes of the instalment regime is determined solely by the CT profits position of the company. Companies with significant CT trading losses remain outside the instalment regime until those losses are fully utilised […]


06 Mar 2024

Spring Budget 2024

The Chancellor delivered the Spring Budget 2024 today.  We summarise below the announcements that were made on the specific rules that may be relevant to UK upstream oil and gas companies. Extension of Energy Profits Levy The Government announced that the Energy Profits Levy will be extended for 12 months so that it will now apply to 31 March 2029.  The change results in additional tax receipts of £1.53bn.  The Chancellor justified the extension by stating that the higher energy […]


09 Feb 2024

Green Investment Pledge

The Labour Party announced on 8 February that they are dropping their pledge to spend £28bn per year on “green investment”. As part of the briefings around this announcement, the following comments on the windfall tax were reported in the Press. Labour will introduce a proper windfall tax on the excess profits of oil and gas companies, o we can invest in the clean power we need to cut bills for families. Labour will fix the holes in the Energy […]


22 Nov 2023

Autumn Statement 2023

The Chancellor delivered the Autumn Statement 2023 today.  We summarise below the announcements that were made on the specific rules that apply to UK upstream oil and gas companies. Energy Security Investment Mechanism (‘ESIM’) The Government announced today that the ESIM, through which the Energy Profits Levy (EPL) will be terminated early in the event oil and gas prices fall below a threshold, will be legislated.  It also clarified how those threshold prices would be measured. The ESIM was announced […]


10 Jul 2023

Scope of the ring-fence decision published

Court of Appeal decision published in the Royal Bank of Canada case In March 2022. we published a newsletter on the Upper Tribunal (‘UT’) decision that considered whether an oil and gas “royalty” interest held by a non-UK resident (Royal Bank of Canada (‘RBC’)) gave rise to ring-fence income and whether the relevant treaty allowed HMRC to tax the income. The UT decided in favour of HMRC, and RBC was held to be liable to UK ring fence corporation tax […]


04 Apr 2023

Transfer Pricing Documentation – requirement for larger businesses for accounting periods commencing on or after 1 April 2023

UK Upstream Oil and Gas Tax

Companies that are members of multinational groups (“MNE”) with annual consolidated revenue of €750 million or more will be required to maintain transfer pricing records. The records will be specified under a Regulation that has yet to be published but HMRC have already announced that it will require records that conform to those specified in the OECD requirements for Local and Master files. The draft Regulation contained an exception for transactions where both parties are subject to UK CT unless […]


31 Mar 2023

Decarbonisation Allowance

As reported in our Newsletter of 15 March, the increase in the rate of Energy Profits Levy (‘EPL’) to 35% is accompanied by a new decarbonisation allowance to reduce profits charged to EPL.  The allowance will be generated at a rate of 80% of the qualifying expenditure as opposed to the 29% rate that applies to other investment expenditure and the Finance Bill  contains the draft legislation. In all cases the expenditure that generates the allowance must be capital in […]


15 Mar 2023

Spring Budget 2023

The Chancellor delivered Spring Budget 2023 today.  There were two announcements on the specific rules that apply to UK upstream oil and gas companies. Decarbonisation allowance The increase in the rate of Energy Profits Levy (‘EPL’) to 35% announced in the Autumn Statement 2022 was accompanied by a new decarbonisation allowance.  This allowance would be more generous than the allowance applied to other investment expenditure. Where expenditure qualifies an additional 80% of that expenditure can be deducted from profits that […]


17 Nov 2022

Autumn Statement 2022

The Chancellor delivered the Autumn Statement 2022 today. As expected the tax rate applicable to UK oil and gas profits is to be increased.  The headline rate of corporation tax for UK oil and gas upstream profits is now 75%.   He also announced a new tax to be levied on some electricity generators at a rate of 45%. Energy (Oil and Gas) Profits Levy (‘EPL’) Increased rate of EPL The rate of EPL is to be increased from 25% to […]


15 Nov 2022

Oil and Gas capital allowances relief- lessons from a recent case

The judgement in a recent case (Gunfleet Sands Ltd and others v HMRC [2022] UKFTT 35 (TC)), concerning the costs of evaluation and design of a potential windfarm development, provides some current judicial thinking on what costs may qualify for plant and machinery capital allowances (PMAs). For large capital intensive projects such as oil and gas projects, as well as alternative energy projects, the entitlement to tax relief for the costs of project scoping, planning, and evaluation has been an […]