British finance minister Rachel Reeves has today announced a change to how oil and gas companies’ profits are taxed, in order to help fund a package of cost-of-living measures.
The UK government’s plans to reform the so-called foreign branches exemption, closing a tax loophole that allows companies to offset overseas losses and reduce the amount of tax paid in the UK.
“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,” Reeves told parliament.
“Today, we are putting an end to that practice,” she said, adding that it would raise hundreds of million of pounds per year.
The funds would go towards financing a series of cost-of-living measures laid out this week by Reeves and which are aimed at easing the economic fallout from the Middle East war on households.
Measures announced today included a 10 pence per mile increase in tax-free mileage rates, scrapping tariffs on certain food items and a temporary cut to valued added tax (VAT) on summer attractions.
Reeves also announced a £350m fund to support important chemicals producers, particularly exposed to high energy prices.
It comes after the UK government led by Prime Minister Keir Starmer this week cancelled a pre-war plan to hike motorists’ fuel duty.
The Treasury plans to also scrap hauliers’ UK road tax for one year and cut the fuel duty on diesel used by farmers, rail freight operators and other off-road users.
