Offshore Energies UK (OEUK) has called on the UK government to end the windfall tax on oil and gas profits by 2026, replacing it with a long-term fiscal mechanism that can adapt to future price shocks.
The industry body says the move is essential to attract investment, safeguard jobs and secure our energy future.
The call comes as the government’s consultation on designing a more predictable tax response to future price volatility closed on 28 May. OEUK is urging that a new system be introduced four years earlier than the proposed 2030 start date.
The Energy Profits Levy (EPL), often referred to as the windfall tax, was introduced in May 2022 after global energy prices surged.
It brings the total tax rate on UK oil and gas producers to 78 per cent. While originally justified by high profits, OEUK points to new data from the Office for National Statistics showing that returns in the sector have now fallen to negative levels.
Despite this downturn, the levy remains in place—something OEUK argues is deterring vital investment in domestic energy projects.
“The sector needs action now to secure jobs, boost energy security, and build for the future,” said OEUK chief executive David Whitehouse. “That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks.”
In 2024, the UK’s energy production hit a historic low, with 40% of demand met by imports. OEUK warns that, without renewed investment, the UK could be reliant on foreign oil and gas for the majority of its needs by 2030.
Whitehouse added: “In a country where today 75% of our energy comes from oil and gas, the solution is the responsible production of our own oil and gas from the North Sea, alongside the build out of renewable energy. It should not be a debate about one form of energy versus another – we need it all.”
OEUK is urging action in the Autumn Budget to secure long-term energy resilience through a more stable investment environment.
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