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Windfall tax to be suspended if energy prices drop
Published
29 minutes ago
Share
IMAGE SOURCE,
GETTY IMAGES
By Noor Nanji
Business reporter, BBC News
The windfall tax on oil and gas firms will be suspended if prices fall to normal levels for a sustained period, the government has announced.
Halting the windfall tax would cut the overall tax rate on energy firms from 75% to 40%.
A windfall tax is used to target firms which benefit from something they were not responsible for.
It was introduced last year to help fund a scheme to lower energy bills for households and businesses.
Energy firm profits have soared recently, initially due to rising demand after Covid restrictions were lifted, and then because Russia's invasion of Ukraine raised energy prices.
But oil and gas prices have now come down from their highs.
Energy firms call for windfall tax to fall with prices
How much windfall tax are oil giants paying?
What is the energy cap and what's happening to bills?
In a statement, the Treasury said the windfall tax would remain until March 2028 but that the tax rate would fall if the average oil and gas prices fall to, or below, a set level for two consecutive three-month periods.
The level has been set at $71.40 per barrel for oil and £0.54 per therm for gas.
Brent crude oil was trading at $75 per barrel on Friday morning, with gas prices at around £0.62.
Energy firms have been urging ministers to reduce the windfall tax, warning that it was causing companies to pull back investment.
The Treasury said its decision had reflected those warnings.
It said any fall in investment "puts the long-term future of the UK's domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus for families and businesses".
Oil and gas firms operating in the North Sea pay 30% corporation tax on their profits and a supplementary 10% rate on top of that.
The windfall tax - or Energy Profits Levy - is set at 35%, taking the overall tax rate faced by oil and gas companies to 75%.
If it is eliminated, the overall tax rate on energy firms would return to 40%.
Related Topics
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Oil
Oil & Gas industry
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Skip to content
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Companies
Technology of Business
Economy
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Cost of Living
Windfall tax to be suspended if energy prices drop
Published
29 minutes ago
Share
IMAGE SOURCE,
GETTY IMAGES
By Noor Nanji
Business reporter, BBC News
The windfall tax on oil and gas firms will be suspended if prices fall to normal levels for a sustained period, the government has announced.
Halting the windfall tax would cut the overall tax rate on energy firms from 75% to 40%.
A windfall tax is used to target firms which benefit from something they were not responsible for.
It was introduced last year to help fund a scheme to lower energy bills for households and businesses.
Energy firm profits have soared recently, initially due to rising demand after Covid restrictions were lifted, and then because Russia's invasion of Ukraine raised energy prices.
But oil and gas prices have now come down from their highs.
Energy firms call for windfall tax to fall with prices
How much windfall tax are oil giants paying?
What is the energy cap and what's happening to bills?
In a statement, the Treasury said the windfall tax would remain until March 2028 but that the tax rate would fall if the average oil and gas prices fall to, or below, a set level for two consecutive three-month periods.
The level has been set at $71.40 per barrel for oil and £0.54 per therm for gas.
Brent crude oil was trading at $75 per barrel on Friday morning, with gas prices at around £0.62.
Energy firms have been urging ministers to reduce the windfall tax, warning that it was causing companies to pull back investment.
The Treasury said its decision had reflected those warnings.
It said any fall in investment "puts the long-term future of the UK's domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus for families and businesses".
Oil and gas firms operating in the North Sea pay 30% corporation tax on their profits and a supplementary 10% rate on top of that.
The windfall tax - or Energy Profits Levy - is set at 35%, taking the overall tax rate faced by oil and gas companies to 75%.
If it is eliminated, the overall tax rate on energy firms would return to 40%.
Related Topics
Tax
Oil
Oil & Gas industry
How much windfall tax are oil giants paying?
Published
2 May
What is the energy cap and what's happening to bills?
Published
25 May
Top Stories
Trump will appear in Miami court on Tuesday, his lawyer says
Published
7 hours ago
Chinese censors take aim at AirDrop and Bluetooth
Published
9 hours ago
Deadly Everest season puts focus on record permits
Published
9 hours ago
Features
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'The level of cruelty... it's like Stalin's time'
O rphans trapped in Sudan war zone rescued
De adly Everest season puts focus on record permits
Qui z of the week: Which book changed Stormzy's life?
The divisive debate over California's anti-caste bill
Mosqu e plasterers and rock cutters: Africa's top shots
Where tipping can be considered rude
Catchin g the men who sell subway train groping videos
Elsewher e on the BBC
Tech Dec oded: The latest news direct to your inbox
Tech Decoded is the BBC's international technology newsletter, bringing you the latest twice a week
Why the c ity that never sleeps is slowly sinking
The genera tion clocking the most hours
Most Read
1
'The level of cruelty... it's like Stalin's time'
2
Donald Trum p faces seven charges over secret files
3
Children st abbed in French park in stable condition
4
Airline Qan tas relaxes gender-based uniform rules
5
Ukraine arm y attacks Russian forces in southern region
6
Deadly Ever est season puts focus on record permits
7
Chinese cen sors take aim at AirDrop and Bluetooth
8
El Niño pla net-warming weather phase has begun
9
Supreme Cou rt backs Jack Daniel's in dog toy row
10
The divisiv e debate over California's anti-caste bill
BBC News Se rvices
On your mob ile
On smart sp eakers
Get news al erts
Contact BBC News
Home
News
Sport
Reel
Worklife
Travel
Future
Culture
Music
TV
Weather
Sounds
Terms of Us e
About the B BC
Privacy Pol icy
Cookies
Accessibili ty Help
Parental Gu idance
Contact the BBC
Get Persona lised Newsletters
Why you can trust the BBC
Advertise w ith us
Do not shar e or sell my info
© 2023 BBC. The BBC is not responsible for the content of external sites.
Read about our approach to external linking.
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