UK increases windfall taxes on North Sea Oil and Gas Producers

Finance Minister Rachel Reeves said on Wednesday that the British government would increase its windfall tax for North Sea oil-and-gas producers from 35% to 38% and extend it by one year.

Reeves, who presented the first budget of the new Labour Government, said that the increase in the windfall tax - also known as the Energy Profits Levy - will come into effect on November 1.

The headline tax rate for oil and gas activity is now 78%. This is among the highest rates in the world. The duration of the law will be extended an additional year, until March 2030.

The Labour Government, which was elected in July, is looking to use oil and gas revenues to fund renewable energy projects.

North Sea producers warned that a higher tax rate may lead to a drop in investment in an ageing basin.

In May 2022, the former Conservative government introduced a 25% windfall tax in response to the soaring prices of energy following Russia's invasion in Ukraine. In November 2022 the tax was increased to 35%, and in March 2024 it was extended for an additional year. (Reporting and editing by Christina Fincher.)

(source: Reuters)