UK HMRC’s monthly fuel duty receipts report reveals a £4.1bn ($5.51bn) collection from April 2024 to May 2025, marking a £0.1bn increase from the previous year.

Despite this slight uptick, the annual figures between 2024 to 2025 indicate a general decline, largely attributed to reduced diesel receipts as consumers move towards electric and hybrid vehicles.

The Energy Profits Levy (EPL) revenues for May 2025 were notably absent from the current tax receipts for the second month in a row.

This omission is anticipated to contribute to the ongoing downward trend that has been observed since the introduction of the windfall tax in 2022.

RSM UK co-head of Energy and Natural Resources Sheena McGuinness said: “Despite the government’s claims that the UK is on the brink of a ‘green industrial revolution’, the annual fall in fuel duty revenues continues to cast doubt on the government’s energy strategy and its commitment to achieving net zero. With declining revenues and £2.5bn from GB Energy funding now earmarked to develop small modular reactors through Great British Nuclear, the government’s ambition for GB Energy to invest in renewables and drive impact in the UK’s energy transition is becoming increasingly unviable.”

McGuinness further highlighted the government’s recent £14.2bn investment in the Sizewell C nuclear power station as a significant move towards clean energy. This investment is expected to bolster the clean energy supply, create jobs, and reduce consumer bills.

However, this pivot towards nuclear energy represents a departure from previous commitments to renewables, possibly influenced by the Spanish grid blackouts, which raised concerns about the reliability of renewable energy sources.

The gradual transition to net zero suggests a redirection of funding away from immediate clean energy solutions. The decline in EPL tax revenue further exacerbates the funding shortfall for renewable energy projects and grid infrastructure.

In the short term, the UK may continue to depend on energy imports and remain susceptible to market volatility. This could lead to missed opportunities in capital investment in renewable energy projects abroad in the long term, as per McGuinness.

Amidst these financial trends, there is also speculation that the government may resume the approval process for North Sea oil fields. This follows a period of stagnation due to legal disputes that halted drilling activities.

A positive decision could make way for increased oil and gas production and potentially boost EPL revenues, indicating a potential shift away from renewable energy investments.

McGuinness added: “With the Industrial Strategy expected next week, the clean energy sector needs to see tax policy and grid reform. Although the Infrastructure Strategy focuses on tackling connection delays, addressing supply chain challenges and supporting skills development, there is no mention of targeted tax incentives, which should be prioritised to unlock investment, strengthen energy security, and help position the UK as a global leader.”