Fiscal Pressures and Investment Certainty: The Evolution of the United Kingdom’s Oil and Gas Windfall Levy

Amid surging energy prices and economic uncertainty, the United Kingdom has repeatedly recalibrated its windfall tax on oil and gas producers. This article traces the evolution of the Energy (Oil and Gas) Profits Levy, from its initial introduction, as a temporary 25% measure in 2022, to its current iteration under the Finance Bill 2024-25, which raises the levy to 38%, narrows investment allowances and extends its expiry to 2030. In scrutinizing these successive policy adjustments in light of shifting political leadership and pressing fiscal challenges, the analysis highlights the inherent tension between immediate revenue needs and the pursuit of long-term investment certainty.