Business is booming.

Shell and BP to share in £7.5bn taxpayer handout

Shell and BP share in huge giveaway that will blow a hole in windfall tax profits: £7.5bn taxpayer for oil titans

  • Energy giants are already getting bounties from Treasury to invest in the North Sea
  • New changes have been ushered in that will boost subsidies
  • Plans introduced at the same time as the government’s £5bn ‘windfall tax’
  • City sources describe exceptionally high incentives as ‘more than credible’

<!–

<!–

<!–<!–

<!–

<!–

<!–

OIL and gas titans will give away a massive taxpayer of up to £7.5bn despite making record profits.

BP and Shell are among the companies that will benefit from new tax breaks, despite BP boss Bernard Looney comparing his company to an ‘ATM’.

Energy giants are already receiving financial incentives from the ministry to invest in the North Sea, but new changes have been initiated that will boost subsidies. The plans were introduced at the same time as the government’s £5bn ‘windfall tax’ – billed as a tax on energy companies to help pay for living expenses.

Rising storm: Energy giants already receive financial incentives from the ministry to invest in the North Sea, but new changes have been set in motion that will boost subsidies

Rising storm: Energy giants already receive financial incentives from the ministry to invest in the North Sea, but new changes have been set in motion that will boost subsidies

Sources in the city described the exceptionally high incentives as “unbelievable” and told The Mail on Sunday they would take money from the public treasury, possibly for no extra profit.

Dan Neidle, head of the nonprofit Tax Policy Associate, described the policy as “just a handout to business.”

The plan comes amid a government effort to boost Britain’s energy security after Russia’s war in Ukraine sparked a surge in gas and oil prices.

The new tax benefits for the North Sea are almost double the tax reduction. The so-called ‘super deduction’ means that investing £100 in the North Sea will ‘cost businesses just £8.75’, according to the Institute for Fiscal Studies. The tax cuts are likely to spark anger among families struggling to pay household bills due to the cost of living crisis.

Bank of England Governor Andrew Bailey warned last week that the UK will slide into a recession this winter, fueled by a startling 13 percent rise in inflation.

The MoS has seen estimates exposing the dazzling rights for oil and gas companies investing in the North Sea. Analysts warned that the stimulus may not increase investment. They said taxpayers will spend the £7.5bn three and a half years on investment plans already in place.

News of the massive tax breaks introduced by former Chancellor Rishi Sunak came just days after British oil majors BP and Shell reported record-breaking performances. Last week, BP announced its second-quarter profits had more than tripled to a 14-year high, while Shell also announced its highest-ever profit for the three months to June.

This came after a grim forecast from energy consultant Cornwall Insight, who said average annual household energy bills could reach £3,615 as of January.

A senior financial analyst, who wishes to remain anonymous, said the Treasury regime was designed to give oil and gas companies “crazy incentives” to invest.

He said: ‘The government is encouraging investment at a time when Russia is invading Ukraine and we say we want every last drop from the North Sea. But the incentive to invest is unbelievable… it’s scary. This new tax regime could easily change something uneconomical [for the companies] into something that is commercially very attractive.’

Neidle wondered if the incentive would have the desired long-term effect of pumping more money into the North Sea. He said the relief will only last about three years and “probably won’t encourage much, if any, investment.” He said the result could be a ‘dead-weight’ cost to taxpayers – meaning there is no additional investment in the North Sea, but there is a huge financial benefit to the companies.

The tax regimes of oil giants operating in the UK have become increasingly critical in recent years. Company documents show that BP and Shell’s North Sea operations have already benefited from huge tax refunds.

Tessa Khan, director of campaign group Uplift, said the UK’s tax system “makes Britain’s waters the most profitable in the world for new offshore oil and gas fields. This is a slap in the face to the British public, who continue to foot the bill for government subsidies to the oil and gas industry and add fuel to the climate crisis.’

The government has defended its unexpected tax plans, which it predicts will raise £5bn in the first year. It could generate billions more in the years to 2025.

The Treasury Department said: “As set out in the UK’s energy security strategy – with Putin’s invasion of Ukraine illustrating its merit – North Sea oil and gas will be critical to domestic energy supply and security in the near future. from the UK, so it’s right that we continue to encourage investment there.’

BP said it expected to pay £1.25 billion in tax this year, even before the windfall tax was included, and would invest up to £18 billion this decade on top of its plans for the North Sea. Shell said in May that the company will pay ‘hundreds of millions’ in UK tax in the coming years.

.