The Government today confirmed that the windfall tax on North Sea oil and gas producers will remain in place, citing continued volatility in global energy markets and the need to protect public finances while supporting the transition to clean energy.

The levy, formally known as the Energy Profits Levy, was first introduced in 2022 in response to extraordinary profits recorded by producers operating in the North Sea. Officials said the policy continues to strike a balance between encouraging investment in domestic production and ensuring energy companies contribute fairly during periods of elevated prices.

Scottish Finance Secretary Shona Robison commented: 
“It is very disappointing that the Chancellor does not appear to have heeded repeated warnings from across the energy industry on the urgent need to remove the tax grab on Scotland’s energy.

“When she meets North Sea industry leaders, she must announce an end to this tax on Scotland’s energy to prevent further loss of jobs and investment.

“In order to provide the necessary certainty and stability, an immediate end date needs to be legislated on at the earliest possible opportunity.

“Amid continued global instability, many households and businesses will be looking for reassurance that their costs won’t increase further.

“Fuel duty is a key concern and the Chancellor has failed to provide that reassurance. This emphasises the need to urgently engage in meaningful four-nations discussions on motoring taxation, as we have repeatedly called for.

“Families will also be worried about increased energy bills given the ongoing international situation, which risks worsening a situation in which people are already struggling to pay their bills.

“Again, it is disappointing that the Chancellor appeared to have no answers for those households.”

Investment and Transition Safeguards

Officials emphasized that investment allowances remain in place to incentivize capital expenditure in domestic production and decarbonisation initiatives. Companies reinvesting profits into new projects and emissions reduction technologies can offset a portion of their tax liability.

Industry groups have previously argued that maintaining the levy risks discouraging long-term investment in the UK Continental Shelf. However, the Treasury stated that stability and clarity around the tax framework provide certainty for operators.

Fiscal Responsibility and Energy Security

The Government reaffirmed its commitment to fiscal responsibility and energy security, stressing that domestic production remains an important part of the UK’s energy mix during the transition to net zero.

The Energy Profits Levy will continue to be reviewed in line with market conditions, with the Government pledging to provide advance notice of any future changes.

KeyFacts Energy news: North Sea Focus