Offshore Industry: Taxation
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the Energy Profits Levy on investment in North Sea oil and gas projects; and whether her Department has estimated the capital investment generated by reforming that levy before 2026.
Answered by Dan Tomlinson
The Government has carefully considered the potential impacts of the Energy Profits Levy (EPL), including on investment. The Treasury publishes impacts in summary form for tax measures in tax information and impact notes (TIINs) alongside the Finance Bill. The most recent summary of impacts from the EPL can be found here: https://www.gov.uk/government/publications/energy-profits-levy-reforms-2024.
The Government is clear that the EPL will end in 2030, or earlier if the EPL’s price floor, the Energy Security Investment Mechanism (ESIM), is triggered. While it remains in place, the EPL is forecast to raise around £8.5 billion between 2025/26 and 2030/31, contributing towards funding vital public services. This is in addition to more than £11 billion in tax revenues already raised through the EPL since its introduction in May 2022.
The Government is committed to providing the oil and gas industry with the long-term certainty it needs on the future fiscal landscape and to support capital investment. At Budget 2025, the Government announced the details of the EPL successor regime, the Oil and Gas Price Mechanism. This new regime is designed to respond to future price shocks once the EPL ends, to create a stable, predictable fiscal environment that ensures companies continue to contribute fairly when oil and gas prices are unusually high while supporting investment in the UK’s oil and gas sector.
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