Oil giant Shell to pay tax in UK for first time in six years amid huge profits

07.01.2023 - 02:39 / dailyrecord.co.uk

Oil giant Shell is set to pay tax in the Uk for the first time in six years.

The firm, which last paid money to HMRC in 2017, will fork out after making huge global profits last year. The energy firm said it expected to "take a hit" of around $2bn (£1.7bn) on profits in the UK and the European Union in the final three months of the year.

A windfall tax has been imposed on energy companies by governments to try and capture some of the massive profits they have made through high oil and gas prices. The BBC reports that Shell has not disclosed how much UK tax it will finally pay, but that it's understood the figure could be lower than forecast.

The amount of tax shelled out by oil and gas companies in the UK can fluctuate. Investment in areas such as renewable energy, decommissioning of North Sea oil platforms, and losses can reduce the overall bill. Shell's profits hit $9.5bn across its global business between July and September last year.

At the time, the company said it was exempt from paying tax because of large investments in the UK meaning it had not made a profit on British shores. But earlier today, the firm said it expects to pay some tax here for the first time since 2017. The announcement comes after the UK Government increased tax on the profits made from extracting UK oil and gas.

The policy, which is called the Energy Profits Levy and is more commonly referred to as the windfall tax, raised tax to 35% from 25% in November. Shell did not break down how the $2bn hit to its earnings in the final months of 2022 would be split between the UK and the EU.

Oil and gas prices began to rise after the end of Covid lockdowns but surged after Russia's invasion of Ukraine, resulting in bumper profits for energy companies