Chancellor Rachel Reeves is considering ending the windfall tax on North Sea oil and gas producers a year earlier than planned, according to reports this morning.
The move, currently under discussion ahead of next month's Budget, would see the Energy Profits Levy scrapped in March 2029 rather than 2030 — reversing the one-year extension announced in October.
According to the Financial Times, Ms Reeves is seeking assurances from oil and gas companies that an early removal of the tax would translate into new investment and job creation in the North Sea.
The Chancellor and Prime Minister Keir Starmer are understood to view the basin as central to stimulating growth in the British economy, even as Labour maintains its policy of banning new exploration licences for undeveloped fields.
The industry’s main trade body, Offshore Energies UK (OEUK), has argued that abolishing the temporary levy and introducing a stable long-term fiscal regime could unlock £40billion of investment across 90 projects.
Chief executive David Whitehouse warned this week that the current tax regime is costing 1,000 jobs a month and risks pushing investment overseas.
While no final decision has been made, Treasury officials are reported to be weighing the short-term loss of revenue — around £1billion according to the Office for Budget Responsibility — against the potential for higher growth and future tax receipts if North Sea activity rebounds.