What is the energy profits levy?
The Energy Profits Levy is a windfall tax on profits from UK oil and gas production. Introduced in 2022 after energy prices soared, it is currently charged at 38%, taking the headline tax rate on North Sea profits to 78%. It is due to remain in place until 31 March 2030.
The levy was introduced in May 2022 at 25%, when the war in Ukraine pushed oil and gas prices to record highs. It rose to 35% in 2023 and to 38% in November 2024. It sits on top of ring fence corporation tax at 30% and a supplementary charge of 10%. That gives a combined headline rate of 78%. A decarbonisation allowance can cut bills.
It will end on 31 March 2030, or earlier if oil and gas prices fall below set levels for a sustained period. From then, a permanent Oil and Gas Price Mechanism will take over. That will charge 35% only on revenue earned when prices are unusually high. For 2026/27 the thresholds are $90 a barrel for oil and 90p a therm for gas.
Supporters say the levy makes companies share windfall gains that come from global events, not their own effort, and helps pay for energy support. The industry says it has cut investment, sped up the decline of the North Sea and cost jobs, particularly in north-east Scotland. Others point out that UK production is already falling as fields age. Debate continues over how to manage the transition.
Who it affects: North Sea oil and gas producers
The left generally supports the levy as fair taxation of excessive profits and wants the money used to cut bills.
The right generally opposes the levy, arguing it drives away investment, threatens jobs and makes the UK more reliant on imports.
Britain is split. Now you decide.
In WeDecide you can raise, cut or scrap the Energy Profits Levy in your Budget and watch North Sea jobs and revenue respond.
Play WeDecide freeCommon questions
What is the Energy Profits Levy rate?
It is 38%, giving a headline rate of 78% on North Sea oil and gas profits.
When will the Energy Profits Levy end?
It is due to end on 31 March 2030, or earlier if prices fall for a sustained period.
Is the Energy Profits Levy a windfall tax?
Yes. It was created to tax unusually high profits from soaring energy prices.