Following the new Budget yesterday the Energy Industries Council (EIC) has said that raising taxes on net income could drive investments outside of the UK.
The EIC claim that the hike in tax to 75% of net profits could also delay projects.
“Companies already pay 65% tax on their earnings after the government raised the tax rate by 25% in June,” the EIC wrote.
Representing over 800 firms across the entire energy sector, the trade association is primarily made up of medium-sized and small energy supply chain companies.
The association thinks that the added taxation on profits may be a bridge too far for investors in the UK energy sector.
David Clark, non-executive director at EIC’s board and chief executive officer of Vysus Group, said: “With the changes announced so far, it is clear that the UK energy market will be less attractive to international investors and will likely see further supply chain investment being redirected internationally further weakening the local expertise and capability.”
Neil Golding, EIC’s director of market intelligence added: “A temporary levy on profits could lead to significant effects on the energy supply chain companies as operators and investors may now look to put on hold projects and possibly redirect their planned investment elsewhere.”
However, the EIC did support the government’s plan to go ahead with the Sizewell C nuclear power plant, which will create 10,000 jobs.
“Government support for Sizewell C is great news for our supply chain companies and will lead to further opportunities for companies working in the sector,” Mr Golding said.
“The UK supply chain has been instrumental in developing the Hinckley Point C plant. The announcement made by the Chancellor will ensure that the nuclear supply chain will remain rooted in the UK which will be needed to meet the UK’s future plans for nuclear generation.”