EurOil: UK U-turns on windfall tax

The UK government imposed a 25% tax on profits by oil and gas companies in late May, marking a policy U-turn and a departure from the North Sea industry-friendly image that it has sought to cultivate.

The one-off surcharge is on top of the 40% headline tax rate that the industry already pays on its profit, as well as its 30% ringfenced corporation tax and 10% supplementary charge. The government said the move would raise around GBP5bn ($6.3bn) over the next year, helping to support a £15bn support package that will provide each UK household with a GBP400 discount on their energy bill, and more for low-income households.

Prime Minister Boris Johnson’s administration has previously resisted opposition calls for such a tax, arguing that it would deter investment at a time when the global energy crisis has made sufficient domestic energy supply critical. However, amid soaring energy costs that have exacerbated a cost-of-living crisis in the UK, the government has shifted its position.

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