Energy Profits Levy

Energy (Oil and Gas) Profits Levy Act 2022

Parliament of the United Kingdom
Long title	An Act to make provision for, and in connection with, imposing a charge on ring fence profits of companies.
Citation	2022 c. 40
Introduced by	Chris Heaton-Harris MP, Parliamentary Secretary to the Treasury (Commons) Baroness Penn, Parliamentary Secretary to the Treasury (Lords)
Dates
Royal assent	14 July 2022
Status: Current legislation

The Energy Profits Levy (sometimes referred to as the Energy (Oil and Gas) Profits Levy) ^[1] is a tax levied on profits made from oil and gas operations in the United Kingdom.

Background

In 2021, the Scottish National Party proposed a "broad-based" tax on excess profits of major companies. ^[2]

Before the levy was introduced, there was a 40% headline rate tax on profits from the production of oil and gas. ^[3]

In 2022, the Energy (Oil and Gas) Profits Levy Act 2022 was passed in the Parliament of the United Kingdom. ^{[4] [5]}

In June 2023, the Labour Party announced proposals to reform the levy. ^[6] In February 2024, Labour dropped plans to backdate the levy and the SNP announced its opposition to Labour's proposed reforms to the levy, saying that it would threaten jobs. ^{[7] [8]} In March 2024, the levy was extended until 2029, by the Sunak ministry. ^[9] In March 2025, the Starmer ministry announced an extension to the levy to 2030, while also announcing that the levy would be replaced. ^[10]

In November 2024, the rate increased from 75% to 78%. ^[11]

In June 2025, the leader of the Opposition, Kemi Badenoch, announced that the Conservative Party would repeal the tax if the Conservatives won the next United Kingdom general election at the 2025 Scottish Conservatives conference. ^[12] These remarks were criticised by the End Fuel Poverty Coalition. ^[12]

Receipts

Energy Profits Levy receipts

Tax year	Sum (£)	Ref.
2022–23	2,600,000,000	[13]
2023-24	3,600,000,000	[13]

References

1. "Changes to the Energy (Oil and Gas) Profits Levy". GOV.UK. 2024-07-29. Archived from the original on 2025-05-10. Retrieved 2025-06-02.
2. Dykes, Andrew (2022-03-16). "SNP calls for cross-sector windfall tax on 'excess profits'". Energy Voice. Archived from the original on 2022-03-16. Retrieved 2025-05-23.
3. Seely, Antony; Keep, Matthew (2025-05-30). "Energy (Oil and Gas) Profits Levy Bill 2022-23". House of Commons Library.
4. "UK lawmakers approve windfall tax on oil and gas producers". Reuters. 2022-07-11. Archived from the original on 2022-09-01. Retrieved 2025-05-30.
5. Brown, Thomas (2022-07-07). "Energy (Oil and Gas) Profits Levy Bill". House of Lords Library .
6. Nanji, Noor (2023-06-09). "Windfall tax to end if energy prices drop". BBC News. Archived from the original on 2023-06-09. Retrieved 2025-05-30.
7. "SNP will oppose Labour's windfall tax plans". BBC News. Archived from the original on 2024-02-20. Retrieved 2025-05-30.
8. Parker, George , and in London 2 hours ago; Millard, Rachel; Uddin, Rafe (2024-02-29). "Labour drops plan to backdate UK windfall tax on oil and gas". Financial Times. Archived from the original on 2024-02-09. Retrieved 2025-05-30.
9. "Oil and gas profits windfall tax extended until 2029". BBC News. 2024-03-06. Archived from the original on 2024-03-06. Retrieved 2025-05-30.
10. "UK government to end North Sea windfall tax in 2030". BBC News. 2025-03-05. Archived from the original on 2025-04-06. Retrieved 2025-06-13.
11. "What is the windfall tax on oil and gas companies and how much do they pay?". BBC News. 2024-10-22. Archived from the original on 2025-03-03.
12. Lockhart, David Wallace (2025-06-13). "Badenoch calls for end to oil and gas windfall tax". BBC News. Archived from the original on 2025-06-13. Retrieved 2025-06-13.
13. "Government revenues from oil and gas production September 2024". GOV.UK. Archived from the original on 2025-05-10. Retrieved 2025-05-30.