The Treasury is considering scrapping the oil and gas windfall tax as early as next year in a move aimed at reviving growth ahead of November’s Budget.
Officials have reportedly asked energy firms to assess how much investment could be unlocked if the Energy Profits Levy (EPL) were removed in 2026 — four years earlier than planned.
The discussions were confirmed by Offshore Energies UK (OEUK), which alongside partners including Aberdeen & Grampian Chamber of Commerce, recently stepped up lobbying efforts with new proposals and a letter to Chancellor Rachel Reeves.
The trade body is calling for the levy to be wound down early and replaced with a new, long-term fiscal framework, estimating it could unlock £40billion of investment across more than 90 projects.
“This is a critical time. Embrace our proposal, and our members stand ready to deliver economic growth and a sustainable future,” OEUK CEO David Whitehouse wrote in the letter.
The EPL was introduced by then-Chancellor Rishi Sunak in 2022 to capture record oil and gas profits and help fund household support during the energy crisis.
Since then, both Conservative and Labour governments have increased its rate and duration, leaving companies facing an effective 78% tax rate until 2030.
A Treasury spokesperson told Politico: “The EPL will end by March 31, 2030, at the latest. We’re working with the sector and others to decide how the tax system should deal with unusually high prices once the levy ends, so businesses have certainty and still pay a fair share when there is a price shock.”
Industry sources quoted by Politico said oil and gas companies have been in and out of the Treasury this month making their case, describing “a power play between No. 10 and No. 11” with the Treasury pushing for “a more pro-growth and pro-jobs position.”