Shell paid no tax on its UK oil and gas production last year – despite making a £14.7bn profit
While millions of UK households face huge energy bill increases, Shell’s annual report shows the oil giant paid no tax on its North Sea production in 2021 – and even got a £92m tax refund from the government.
The threshold at which income tax must be paid has also been frozen, meaning more people will pay income tax while pay rises could take employees into new tax bands.
Dustin Benton, policy director at Green Alliance, said: “Oil and gas multinationals are making supernormal profits in the UK while ordinary people are struggling to pay their heating bills.
“Windfall taxes have been introduced before, including by Conservative governments. The case for a rethink grows stronger by the day”.
Oil and gas companies have made record profits during the energy crisis thanks to oil and gas prices soaring worldwide. During the first nine months of 2021, the largest companies made a combined $174bn (£132.8bn) in profits. Shell’s profits for the year totalled $19.3bn (£14.7bn).
Shell’s annual reports reveal this is the fourth consecutive year it has not paid UK tax on its oil and gas production in the North Sea, thanks to refunds for decommissioning platforms offsetting tax obligations.
Since 2016, when then-chancellor George Osborne changed tax rules, oil companies have received bumper tax refunds for decommissioning oil projects, with Shell receiving annual payments of between $99m (£75.5m) and $141m (£107.6m) since 2017, when it paid $95m (£72m) in taxes.
Shell’s largest decommissioning project is the Brent oil and gas field, which is made up of four oil platforms.
Shell has been taxed for operations in other countries, with documentation revealing the oil giant paid $4.5bn (£3.4bn) in taxes, fees and production entitlements in Norway in 2021.
Instead, consumers are now shouldering the burden of higher energy prices, with bills rising by up to 54 per cent this month as the energy price cap was raised.
Chancellor Rishi Sunak’s Spring Statement was widely condemned by poverty charities for failing to deal with the cost of living crisis. The Resolution Foundation warned the “poorly-targeted” package will push more than one million people into poverty as prices rise.
Danny Gross, energy campaigner at Friends of the Earth, said: “Big oil and gas companies can’t go on raking in record profits and paying zero tax at the expense of people across the country, not when energy bills have jumped by 50 per cent and are expected to rise higher still later this year.
“People want to see the government proving it’s not at the whim of corporate greed. It must seize its upcoming energy review as an opportunity to introduce a Windfall Tax on profiteering fossil fuel giants.