The Treasury has announced that the energy profits levy which, under the Energy (Oil and Gas) Profits Levy Act 2022, runs until 31 March 2028, will cease to apply if oil and gas prices return to ‘historically normal levels for a sustained period’. The UK government is calling this new guarantee the energy security investment mechanism, with the intention of giving increased certainty to the sector that the windfall tax will not simply continue to apply to excess profits if prices fall to more normal levels before the levy’s expiry.
Even though the commitment is designed to ensure continued investment in oil and gas extraction in the UK, the government acknowledges that prices are not expected to fall to normal levels much before the March 2028 end date, and so the mechanism may not be triggered until around that time.
The Treasury has announced that the energy profits levy which, under the Energy (Oil and Gas) Profits Levy Act 2022, runs until 31 March 2028, will cease to apply if oil and gas prices return to ‘historically normal levels for a sustained period’. The UK government is calling this new guarantee the energy security investment mechanism, with the intention of giving increased certainty to the sector that the windfall tax will not simply continue to apply to excess profits if prices fall to more normal levels before the levy’s expiry.
Even though the commitment is designed to ensure continued investment in oil and gas extraction in the UK, the government acknowledges that prices are not expected to fall to normal levels much before the March 2028 end date, and so the mechanism may not be triggered until around that time.
