UK energy sector calls for grid reform amid slump in tax revenues
Today’s HMRC monthly tax receipts show fuel duty receipts for April 2025 to July 2025 are £8bn, which is £98m lower than the same period last year. The decline was primarily driven by a move away from diesel towards electric and hybrid vehicles.
In addition, Energy Profits Levy (EPL) revenues in July were £0.77bn, which is £180m lower than the last EPL revenues published in January 2025 (£0.95bn). Similarly, figures published by the Scottish Governmentshow that Scotland’s North Sea revenue fell to £4.1bn from £4.9bn in 2023-24.
Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK, said: “The continuing downward trend in fuel duty revenues reflects the shift from petrol and diesel car towards electric vehicles (EVs), a positive development for the UK’s transition to net zero. This transition was recently boosted by the government’s £650m Electric Car Grant (ECG) announcement. While the ECG scheme is designed to benefit both consumers and car manufacturers, the sector urgently needs to see accelerated grid reform to ensure EVs are a viable and accessible option for all.
“We’re seeing the industry take a proactive approach to improving the UK’s energy infrastructure, including Statera Energy’s launch of Thurrock Storage, the UK’s largest battery energy storage system. This facility marks an important step in the transition to clean energy and will help to ensure grid flexibility and resilience. It’s therefore key that the government also plays its part in reforming grid connectivity, and we’ve seen a record number of planning approvals for renewable energy capacity in Q2 2025. Following the launch of the Industrial Strategy in June, we expect further details on the Connections Accelerator Service in Q4 2025, which should help to streamline grid access for major investment projects.”
She added: “In addition to the challenges of transitioning to clean energy, overall tax revenues have more than halved, compounded by the latest decreases in fuel duty and EPL receipts, with similar declines seen in Scotland. The tightening of public finances leaves limited scope for much-needed infrastructure investment. Following pressure from oil and gas companies to overhaul the windfall tax, it’s likely that the government will announce significant changes in the Autumn Budget including what will replace fuel duties as a source of fiscal revenue, underpinned by the Clean Energy Flexibility Roadmap.”