The UK Oil and Gas Group (OEUK) stated in its annual economic report that a new tax regime to be implemented from 2027 could add £14.9 billion (equivalent to $20 billion) to UK revenues. The group suggests to the Burnham government that the planned tax changes for 2030 be brought forward and implemented from January 2027.
Necessity of Tax Changes
The UK tax regime has changed frequently since 2022, with these changes occurring under both Conservative and Labour governments. This instability in tax policies and increased taxes has led companies to withdraw from investing in the North Sea. According to OEUK, sudden taxes and frequent policy changes have pushed oil and gas companies towards exiting this region.
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OEUK has also stated that implementing the new "Oil and Gas Revenue Levy" (OGR) in 2027 would generate £2.4 billion more than the current plan for 2030, compared to the existing tax path including corporate tax, energy income tax, and oil and gas income tax. Additionally, this change could bring in £12.6 billion from additional payroll taxes, totaling £14.9 billion.
Investment Implications and Energy Security
The group has also warned that insufficient investment in the North Sea could increase the UK's dependence on oil and gas imports, which could have serious consequences given the current geopolitical conditions and global instability. David Whitehouse, CEO of OEUK, emphasized that the right financial choices could unlock billions in private investment and help strengthen energy security and increase government tax revenues.
OEUK had previously requested John Healey, the Chancellor of the Exchequer, to implement the new tax regime from January 2027. According to Whitehouse, the current energy income tax situation is already causing investment flight from British shores, and this trend will lead to a severe decline in the oil and gas sector.
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