Reuters, citing unnamed industry sources, reported on Monday that the windfall tax on profits of British energy companies is expected to be extended for another year until 2029 during its annual budget speech later this week.
Shortly before the report's release, UK oil and gas producers organized crisis talks at the end of February to discuss the potential "thump" impact on production, dividends and employment in the industry.
On Wednesday, UK Chancellor of the Exchequer Jeremy Hunt is expected to reveal the extension in a budget speech. The windfall tax on energy companies was first introduced in May 2022. In the fourth quarter of 2022, Hunt raised the windfall profits tax from 25% to 35%, which Reuters noted eventually led to an overall tax burden of 75% for UK North Sea oil and gas producers. At that time, the windfall tax was also extended from 2025 to 2028, in addition to expanding its net tax rate to 45% for generators.
Reuters, citing sources, said the rate of the windfall profits tax is expected to remain unchanged when Hunt announces an expected extension this week. The crisis meeting at the end of February bemoaned the windfall tax, which the industry fears will slash investment in the country's oil and gas producers. The head of the talks, hosted by the UK's Offshore Energy Agency (OEUK), warned that companies would not be able to attract investors due to the windfall tax policy, with no jobs.
D**id Whitehouse, head of OEUK, said at the time: "These proposals will deal a heavy blow to the energy we need today and the transition to clean energy at home. This prompted the British Labour Party** to respond, arguing that the windfall tax only applies "when there are windfall profits". (Compiled by Xiao Chen).
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