What does Schedule 2 paragraph 3 of the Energy (Oil and Gas) Profits Levy Act 2022 do?

Schedule 2 paragraph 3 amends the Instalment Payments Regulations 1998 to integrate the energy profits levy into the existing instalment payment regime for corporation tax. This ensures that levy liabilities are paid in quarterly instalments alongside ring fence corporation tax and supplementary charge obligations, rather than being collected separately or under different timing rules.

How does the energy profits levy affect company size classification for instalment payments?

The amendments ensure that any additional tax arising from the energy profits levy is disregarded when determining whether a company qualifies as large or very large under the instalment payment rules. This prevents the levy from pushing a company into a higher size category, which could otherwise alter the timing and number of instalment payments required.

How is the energy profits levy included in quarterly instalment payment calculations?

The amendments expand Regulation 5A of the 1998 Regulations so that references to supplementary charge now also include the energy profits levy, and references to adjusted ring fence profits include levy profits. When a company calculates its quarterly instalment payments, it must include its estimated levy liability in the total amount due alongside other ring fence taxes.

What new definitions are added to the Instalment Payments Regulations 1998 by this paragraph?

Two new defined terms are inserted into the interpretation provisions: 'energy (oil and gas) profits levy' and 'levy profits.' Both terms take their meaning directly from the Energy (Oil and Gas) Profits Levy Act 2022, ensuring consistency between the charging legislation and the administrative regulations governing how and when the tax is paid.

Energy (Oil and Gas) Profits Levy Act 2022 section Sch 2 para 3

Instalment Payments Regulations 1998

Schedule 2 paragraph 3 amends the Instalment Payments Regulations 1998 to bring the energy profits levy into the existing instalment payment regime for corporation tax, ensuring that levy liabilities are paid in instalments alongside other ring fence tax obligations.

The Instalment Payments Regulations 1998 are amended so that the definition of large and very large companies disregards the effect of the Energy (Oil and Gas) Profits Levy Act 2022 when determining company size for instalment payment purposes.
References to "levy profits" and "energy (oil and gas) profits levy" are inserted alongside existing references to ring fence profits and supplementary charge, so that levy amounts are included in the instalment payment calculations.
The headings and operative provisions of the relevant regulations are updated to reflect the addition of levy profits as a new category sitting beside adjusted ring fence profits.
New definitions of "energy (oil and gas) profits levy" and "levy profits" are added to the interpretation provisions of the instalment payment rules, with both terms taking their meaning from the 2022 Act.

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