Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Business confidence wanes amid fears of energy tax hikes

by September 3, 2024
September 3, 2024
Business confidence wanes amid fears of energy tax hikes

Raising the windfall tax on the UK’s oil and gas companies could undermine the government’s goal of boosting economic growth, according to industry body Offshore Energies UK (OEUK). The group warns that the planned tax hike could slash investment, resulting in a £13 billion loss to the UK economy from 2025 to 2029 and putting 35,000 jobs at risk.

The Treasury has responded by affirming its commitment to a “constructive dialogue” with the oil and gas industry over proposed changes to the Energy Profits Levy (EPL), the official name of the windfall tax. Set to rise from 35% to 38% on 1 November, the EPL targets the profits of UK oil and gas firms, which already face a unique tax structure with a 30% corporation tax and an additional 10% supplementary rate. This means that from November, energy companies operating in the UK will see a total tax rate of 78% on profits.

The government also intends to extend the levy until 2030 and tighten investment allowances, which have previously enabled companies to reduce their tax burden through investments in North Sea projects, including green energy initiatives. OEUK argues that these changes would diminish the sector’s capacity to support economic growth, a key priority for the government.

OEUK’s analysis suggests that while the increased tax could yield an additional £2 billion in the short term, it would ultimately result in a £12 billion loss in tax receipts. The industry body also predicts a sharp decline in investment, from £14 billion under current policies to just £2 billion by 2029, jeopardising 35,000 jobs in the same year due to halted projects.

David Whitehouse, OEUK’s Chief Executive, criticised the government’s approach: “This is a government that has made economic growth its main priority and yet our analysis shows that its policy will ultimately reduce this sector’s contribution to the UK economy.”

Introduced in May 2022 in response to soaring oil and gas prices, the EPL was designed as a temporary measure to fund household energy bill relief. OEUK argues that the initial “windfall conditions” no longer exist, making the extension and expansion of the tax unjustified.

A Treasury spokesperson reiterated the government’s stance, stating: “We are committed to maintaining a constructive dialogue with the oil and gas sector to finalise changes to strengthen the windfall tax, ensuring a phased and responsible transition for the North Sea. Our plans for a new National Wealth Fund and Great British Energy will create thousands of new jobs in the industries of the future.”

Meanwhile, business confidence is faltering as talk of tax increases and stricter employment rights dampens the UK’s business environment, according to Anna Leach, Chief Economist at the Institute of Directors (IoD). Following a three-year high in July, the IoD’s Directors’ Economic Confidence Index sharply declined in August. Investment intentions have seen the steepest drop since the onset of Covid-19 lockdowns, with revenue and headcount expectations also down.

“We are calling on the government to take time to get policy design right for the long-term, and deliver the stable tax and policy framework needed to drive business confidence and investment,” Leach urged.

Adding to the cautious outlook, the CBI Growth Indicator survey showed that private sector firms expect modest growth in activity in the three months to November. However, Alpesh Paleja, CBI’s Interim Deputy Chief Economist, described the overall picture as “very mixed,” with consumer-facing businesses struggling and manufacturing momentum remaining sluggish.

As the 30 October Budget approaches, Paleja called for measures to reduce costs, such as long-awaited business rates reform, and a clear business tax roadmap to attract investment. “All this can help to deliver the return to long-term sustainable growth that the new government has promised, and firms across all sectors want to see,” he added.

Read more:
Business confidence wanes amid fears of energy tax hikes

0
FacebookTwitterGoogle +Pinterest
previous post
HPE vows to pursue £3bn damages claim against Mike Lynch’s estate following tycoon’s death
next post
Perception is your reality

You may also like

Investors convert ‘totally worthless’ NFTs into tax write-offs

December 29, 2022

Gove in a fresh bid to scrap green...

October 17, 2023

Jobless rate set to rise’ as experts warn...

November 6, 2024

Ministry of Foreign Affairs of Ukraine Started Call-Center...

August 8, 2022

EU upgrades its forecasts but says UK will...

May 16, 2023

House sales in UK at highest point this...

May 30, 2023

UK can become a “pioneer of responsible AI...

October 30, 2023

Heathrow finally breaks post-pandemic passenger record

October 11, 2023

Why a Structural Warranty is Important for Homeowners:...

March 8, 2023

Trump signals readiness for swift UK-US trade deal...

February 28, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Call with China’s Xi, and Trump-Musk exchange fueled barbs during 20th week in office

      June 7, 2025
    • Trump’s conservative allies warn Congress faces critical ‘test’ with $9.4B spending cut proposal

      June 7, 2025
    • Tech ETFs are Leading Since April, but Another Group is Leading YTD

      June 7, 2025
    • TIMELINE: Inside the evolving relationship between Trump and Musk from first term to this week’s fallout

      June 7, 2025
    • Deadly drone wars are already here and the US is horribly unprepared

      June 7, 2025
    • Week Ahead: NIFTY’s Behavior Against This Level Crucial As The Index Looks At Potential Resumption Of An Upmove

      June 7, 2025

    Categories

    • Business (8,152)
    • Investing (2,019)
    • Politics (15,564)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved