The UK Government has announced changes to the Energy Profits Levy (EPL) designed to create a more balanced investment environment.
Effective from 29th July 2024, the EPL rate for upstream oil and gas will increase from 35% to 38%, raising the total tax on these sectors to 78%.
The 29% investment allowance will be removed from 1st November 2024, although the 80% decarbonisation investment allowance will remain.
Matthew Deitz, Senior Consultant at LCP Delta, commented: “While the news of increased levies and removal of allowances may cause concerns in the upstream oil and gas sector, it’s important to understand that this decision creates a more level playing field between the two schemes.
“This mitigates the risk of crowding out investors who have already demonstrated their appetite to invest in the UK power sector while providing allowances to support the decarbonisation of upstream oil and gas sector operations.”
