What does section 2 of Schedule 2 to the Energy (Oil and Gas) Profits Levy Act 2022 do?

Section 2 of Schedule 2 amends Schedule 18 to the Finance Act 1998 to incorporate the Energy Profits Levy into the existing corporation tax administration framework. It expands the definition of tax, introduces a new reporting requirement for qualifying levy profits or losses, and updates the step-by-step calculation of total tax payable on a company tax return.

How does the Energy Profits Levy affect the definition of tax in Schedule 18 to FA 1998?

The definition of tax in paragraph 1 of Schedule 18 is extended to include the charge under section 1 of the Energy (Oil and Gas) Profits Levy Act 2022. This means the levy is treated as tax for all administrative purposes in Schedule 18, including filing obligations, assessments, enquiries, and claims alongside corporation tax.

What must companies report in their tax return regarding the Energy Profits Levy?

A new paragraph 7B inserted into Schedule 18 requires companies with qualifying levy profits or a qualifying levy loss to include a statement in their company tax return. The statement must set out the amount of those profits or loss and disclose any relief claimed under Schedule 1 to the Energy (Oil and Gas) Profits Levy Act 2022.

How is the Energy Profits Levy included in the calculation of tax payable on a company tax return?

Paragraph 8(1) of Schedule 18 is amended to add any amount chargeable under section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 as a new item in the third step of the tax payable calculation. The levy charge is thereby included in the overall computation of tax payable alongside corporation tax and other existing charges.

Energy (Oil and Gas) Profits Levy Act 2022 section 2

FA 1998

Section 2 of Schedule 2 amends the company tax return rules in Finance Act 1998 to bring the Energy Profits Levy within the existing corporation tax administration framework.

The definition of "tax" in Schedule 18 to FA 1998 is expanded to include the charge under section 1 of the Energy (Oil and Gas) Profits Levy Act 2022.
Companies with qualifying levy profits or losses must include a statement of those amounts in their company tax return for the relevant accounting period.
The return must also disclose any relief claimed under Schedule 1 to the Energy (Oil and Gas) Profits Levy Act 2022 for that period.
The calculation of tax payable in the company tax return is updated so that any amount chargeable under the levy is included as an additional step in the computation.

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