Shell poised to pay UK taxes for the first time in five years

Story by David Connett • Yesterday 

Shell will pay tax in the UK for the first time since 2017 as it is poised to make record profits.

(Photo: Rui Vieira/ PA)© Provided by The i


The energy firm said it expects to pay around $2bn (£1.7bn) on profits in the UK and the European Union.

This would be on top of $360m due on its financial performance in the three months to October 2022. A detailed breakdown of the taxes paid will be published next month, the company said.

Shell has received tax relief on investments it has been making in British areas of the North Sea and on oil-platform decommissioning, which have been higher than the taxes it owed, resulting in nothing being paid.

Last year the UK Government, together with some governments in Europe, imposed windfall taxes on energy companies in an effort to use some of the huge profits firms have made through high oil and gas prices to help consumers.

Chancellor Jeremy Hunt said in his November Autumn Statement that the energy industry will be subject to an expanded windfall tax of 35 per cent. The levy, which ends in March 2028, is expected to raise in excess of $33bn over the next six years

Shell’s former chief executive Ben van Buerden publicly suggested the Government should levy taxes against oil and gas companies to protect the poorest.

Referring to energy companies, he said: “That probably may then mean that governments need to tax people in this room to pay for it. I think we just have to accept as a society – it can be done smartly and not so smartly. There is a discussion to be had about it but I think it’s inevitable.”

Van Beurden was replaced at the start of the year by Wael Sawan, previously the company’s head of gas and renewables.

The European Commission said it originally expected to raise €25bn from the additional oil levy introduced in September, but is now facing a legal challenge from US oil major ExxonMobil.

Analysts said Shell remained on track for record annual profit in 2022, having posted earnings of $30bn in the first three quarters, just shy of the 2008 record profit of $31bn.

Shell said it will increase its ­dividend to shareholders by 15 per cent. It said profits on its natural gas business were “significantly higher” despite major production problems at two plants in Australia.

It also reported higher refining profit margins in its chemicals and fuels business in the last three months of 2022, but said that trading profits from refined products were lower than in the previous quarter.

Shell’s profits come as motoring groups accused retailers, including the largest supermarkets, of not cutting prices quickly enough, or by an appropriate amount, when wholesale costs fall. UK fuel costs are under investigation by the competition watchdog, the Competition and Markets Authority, following record prices last summer.