UK Oil Group Wants North Sea Windfall Tax Scrapped in 2027
Offshore Energies UK has urged the Labour government to end the North Sea windfall tax in 2027, three years before its planned end in 2030. The Guardian
The trade group wants the energy profits levy, an extra tax on North Sea oil and gas profits, replaced with a narrower, price-linked charge. Under its proposal, producers would pay a 35% levy on revenue, but only when oil and gas prices climb above a set level, much like a safety valve that only opens under pressure.
OEUK estimates that switching in 2027 would raise up to £14.9bn more in tax over the next ten years than keeping the current system. Only £2.4bn of that would come directly from oil and gas producers. The group also says early change would unlock up to £50bn of investment in the North Sea.
The campaign goes beyond tax rules. OEUK is also pressing ministers to approve the Rosebank and Jackdaw oil and gas fields in the North Sea. The call came as Britain heads into a winter when household energy bills are expected to hit their highest level since Russia's invasion of Ukraine.
The levy was introduced in 2022 after oil and gas prices jumped following that invasion. It started as a 25% tax on North Sea producers amid soaring energy costs, as reported by Reuters. It was brought in to help hold down household gas and electricity bills, according to the BBC. The rate was later raised to 38% from 35% and extended by one year, Reuters reported. Industry opposition grew at that point, with OEUK warning the rise would lead to nearly £12bn ($16bn) in lost revenue. By February 2026, the government was considering an early end to the tax during talks with producers, as reported by World Oil.
The broader context here is a familiar trade-off in North Sea policy. London wants steady revenue without driving investment away from an older producing area. Industry wants a tax that moves with prices rather than a flat extra charge. OEUK's own numbers show the tension, since most of the promised £14.9bn does not come from oil and gas levies.
In practical terms for ministers, the choice ties together three timelines. One is fiscal, with a 2027 versus 2030 end date. One is operational, with final decisions on Rosebank and Jackdaw. One is political, with winter bills putting household costs back in focus. A tax built for price spikes does not line up neatly with bills shaped by markets, networks and retail pricing.
In my view, the test is whether the Treasury accepts that a lower headline tax on producers could still mean higher total revenue if activity holds up. That case rests on new investment arriving and on prices behaving. Critics will say the plan moves risk back to the public purse if that investment does not come.
