UK Chancellor Jeremy Hunt has confirmed that the windfall tax paid on high oil and gas profits will rise to 35% from a previous rate of 25% from 1 January as he made an Autumn budget statement intended to plug an estimated £55 billion ($65 billion) gap in the public finances of a country where consumer price inflation is running at 11%.
The windfall tax will remain in place until March 2028, extended from December 2025.
The measures announced on Thursday means an overall increase in the tax on the profit from oil and gas companies’ UK operations to 75% from 65%.
“I have no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices,” Hunt told a packed parliament.
“But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses.”
Hunt also introduced a temporary 45% levy on the profits made from electricity generation — higher than expected — and promised an additional £6 billion in government support for energy efficiency measures.
“The structure of our energy market also creates windfall profits for low carbon electricity generation. So from January 1st we’ve decided to introduce a new temporary 45% levy on electricity generators. Together these measures raised £14 billion,” Hunt stated.
Among measures that included a range of indirect hikes in income taxes in the UK, Hunt also extended universal consumer price caps to keep average bills below £3,000 per annum for another 12 months.