How has Shell made £32bn profit from inflated energy prices?

Last Updated: February 2, 2023By Tags: , , , , , , , , , ,

I’m confused.

According to this BBC article, Shell should be paying 75 per cent of its UK profits to the government in taxes.

In a year when the firm has announced record profits (due to inflated energy prices caused by the Russia-Ukraine war) of £32 billion, that comes to £1.2 billion.

It was supposed to pay a 35 per cent Windfall Tax on its “extraordinary” earnings. That would have come to £560 million – but in fact it only paid $134 million (almost £109 million).

There’s an additional 30 per cent in Corporation Tax, which should bring in £480 million, and a supplementary 10 per cent rate that should bring in £80 million. I notice the BBC piece is silent about whether that happened.

And gas and oil firms like Shell are allowed to reduce the amount of tax they pay by the cost of decommissioning projects like North Sea oil platforms and investments in other UK projects.

Meanwhile, the Tory government’s Energy Bills Support Scheme is costing the public £15 billion. The windfall tax was supposed to help fund it – but how many firms pay into it, and how much are they paying, if they are allowed to claw back so many millions?

The government hopes to make £14 billion per year – which is not enough to cover its costs.

And underlying all of this is the elephant in the room: how are these firms being allowed to make such huge profits in the first place?

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  1. lydia February 3, 2023 at 6:12 am - Reply

    It says the tax on profits is 30% and the total tax rate is 75%

    “Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate. Along with the new windfall tax, that takes their total tax rate to 75%.”

    Not entirely sure what that means. Maybe 75% on all income?

    • Mike Sivier February 7, 2023 at 12:44 pm - Reply

      No, just on profits. But I’m told the total amount of Corporation Tax paid by Shell was nothing.

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