BP has announced that it paid £1.2 billion in UK taxes last year, highlighting its economic contribution as the government seeks to increase revenue by closing a tax loophole on overseas activities. The energy firm also emphasized that its North Sea operations are boosting the economy, even as new legislation aims to block fresh fossil fuel licenses.
Breakdown of Tax Payments
The total tax paid in 2025 includes £422 million from the energy profits levy, commonly referred to as a windfall tax. This levy is charged at a rate of 38% on profits generated from oil and gas production. In addition, BP paid corporation tax, employer national insurance contributions, business rates, and customs duties. When including taxes collected and paid to the government on behalf of employees, such as income tax, VAT, and excise duty, BP's total tax bill reached £3.4 billion in 2025.
Government Tax Reforms
The tax report follows Chancellor Rachel Reeves' announcement last month of plans to close a tax loophole concerning the overseas activities of oil and gas firms, aiming to raise hundreds of millions of pounds. In a speech on cost-of-living support, Reeves stated she would prevent companies like BP from reducing tax liabilities through corporate structures involving foreign branches.
Earlier this year, results from BP and Shell showed soaring profits due to strong performance in energy trading, driven by volatile oil prices linked to the Iran war. BP's first-quarter profits more than doubled to $3.2 billion (£2.4 billion), as traders capitalized on market fluctuations.
Employment and Economic Impact
BP reported employing 12,960 people in 2025, while supporting an estimated 63,000 jobs across the UK, including roles in its supply chain. Analysts at Oxford Economics calculated that BP contributed £7 billion to UK GDP. Louise Kingham, BP's UK head of country, noted that this figure encompasses North Sea oil and gas operations, over 1,100 retail sites, aviation fuelling at more than 60 airports, lower carbon energy investments, a London trading hub, and research centres.
Energy Independence Bill
Last month, the government unveiled plans for an Energy Independence Bill, fulfilling a Labour manifesto pledge to stop issuing new licenses for exploring new oil and gas fields. Energy Secretary Ed Miliband stated that clean energy sources like nuclear, wind, and solar will provide future energy independence, while existing fields can remain operational for their lifetime. The plans have drawn criticism from Conservative shadow energy secretary Claire Coutinho, who warned they risk making the UK more dependent on foreign energy supplies.
