Oil and gas windfall tax to be shelved if energy prices fall significantly
Oil and gas producers will not pay a windfall tax if energy prices drop to 'historically normal levels' for a continued period, under plans announced by the Government.
HM Treasury said the measure was needed to encourage investment in the North Sea, protect jobs and improve the UK's domestic energy supply amidst Russia's full-scale invasion of Ukraine.
Oil and gas firms currently pay a 35 per cent 'energy profits levy' on the profits made from North Sea production, in addition to a 40 per cent headline rate of tax.
The UK Government estimates the levy has raised 2.8billion since being introduced by then-Chancellor of the Exchequer Rishi Sunak in May 2022 and is anticipated to raise about 26billion by March 2028.
Money from the levy has gone towards supporting households and businesses with their energy bills, which have skyrocketed in the past 18 months due to the conflict in Ukraine and the loosening of Covid-related restrictions.
But energy companies have complained that the levy has forced them to cut investment plans, even though they can save 91p in tax for every 1 they invest in new production.