Chancellor Rachel Reeves has announced a fresh tax raid on oil and gas companies, scrapping rules that allowed firms to offset UK trading profits against losses made by overseas subsidiaries.
The Treasury said the changes to the Foreign Branch Exemption will help fund a £1.8billion package of cost-of-living support for families and businesses, including energy bill support for manufacturers and targeted funds for sectors including chemicals and ceramics.
Announcing the measures in Parliament, Reeves said: “When a country faces challenges because of higher oil and gas prices, we must ensure that those who benefit from increased prices and volatility pay their fair share.”
She added: “Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no corporation tax on their UK energy trading profits. Today we’re putting an end to that practice.”
However, the policy risks further angering the UK’s already heavily taxed oil and gas industry, and could push jobs abroad.
Dan Slater of Zeus Capital told the Telegraph: “These are international companies that can often easily move activities abroad to more sympathetic jurisdictions, taking the tax they do pay and the often high-value jobs they provide with them.”
Richard Tice, Reform Party’s energy spokesman, said: “Reeves continues to drive entrepreneurs and companies overseas in her failed high tax no growth catastrophic mismanagement of the economy.”