Hiking Energy Tax Will Hit Growth, UK Oil Industry Warns

Raising the windfall tax on the UK's oil and gas companies will undermine the government's goal of growing the economy, the industry has warned, BBC News reported.

Offshore Energies UK (OEUK) stated that the planned increase in the windfall tax could cause investment in the sector to drop sharply, resulting in a £13-billion loss to the UK economy between 2025 and 2029. I Photo: Offshore Energies UK

Offshore Energies UK (OEUK) stated that the planned increase in the windfall tax could cause investment in the sector to drop sharply, resulting in a £13-billion loss to the UK economy between 2025 and 2029.

It also warned that 35,000 jobs could be at risk. The concerns follow the Labour government's plan to increase the windfall tax on profits earned by energy companies.

A Treasury spokesperson noted that the government remains committed to maintaining a "constructive dialogue" with the industry regarding changes to the tax.

Under current plans, the Energy Profits Levy, the official name for the windfall tax, is set to rise from 35% to 38% on November 1, 2024.

Energy companies operating in the North Sea already pay a higher tax rate compared to others: 30% corporation tax on profits, along with a supplementary 10% rate. As of November, the total tax rate on UK energy firms' profits will rise to 78%.