How does section 16 of the Energy (Oil and Gas) Profits Levy Act 2022 handle accounting periods that straddle 31 March 2030?

Section 16 requires any accounting period beginning on or before 31 March 2030 and ending after that date to be split into two deemed accounting periods. The first deemed period ends on 31 March 2030 and the second begins after that date. Levy profits or losses are apportioned between them under section 17.

How are instalment payments calculated for a straddling accounting period under the Energy Profits Levy?

The Corporation Tax (Instalment Payments) Regulations 1998 apply twice for a straddling period: once solely for the Energy Profits Levy and once for all other corporation taxes chargeable on the company. Each calculation uses a separate reading of 'total liability,' keeping levy and non-levy instalment obligations entirely distinct.

Does the Energy Profits Levy itself affect whether a company is classified as a large company for instalment payment purposes?

No. Under section 16, a company is treated as large for the deemed accounting period ending 31 March 2030 only if it qualifies as large for the original straddling period. Whether the company is large is determined without reference to the levy itself, so the levy charge alone cannot push a company into large company status.

What does 'total liability' mean in the context of instalment payments for a straddling period?

For levy instalment payment purposes, 'total liability' means only the Energy Profits Levy amount. For other tax instalment purposes, it means the corporation tax the company would owe for the full straddling period as if the levy did not exist. This separation prevents double counting between the two payment streams.

Energy (Oil and Gas) Profits Levy Act 2022 section 16

Transitional provision for accounting periods straddling 31 March 2028

Section 16 sets out how accounting periods that straddle the levy end date of 31 March 2030 are to be split into two deemed periods, and how instalment payment obligations apply separately to the levy and to other taxes for those periods.

Where an accounting period begins on or before 31 March 2030 and ends after that date, it is split into two deemed accounting periods — one ending on 31 March 2030 and one beginning after that date — with levy profits or losses apportioned between them under section 17.
The Instalment Payments Regulations 1998 apply separately: once for the Energy Profits Levy and once for all other taxes chargeable on the company, with references to "total liability" read accordingly for each purpose.
For levy instalment payment purposes, the deemed accounting period ending on 31 March 2030 is treated as a full accounting period, and the levy is treated as chargeable for that period.
A company is treated as a "large company" for the deemed accounting period only if it qualifies as a large company for the original straddling period, determined without regard to the levy itself.

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member