Source · Select Committees · Scottish Affairs Committee
Recommendation 7
7
Accepted in Part
Commit to urgent publication and early implementation of the new North Sea fiscal regime.
Recommendation
In its response to this report, the Government should commit to a publication date for the outcome of its consultation on the new fiscal regime. To provide much-needed clarity and confidence to the sector, the successor regime should be brought into effect as soon as possible, rather than replacing the Energy Profits Levy from 2030. (Recommendation, Paragraph 67)
Government Response Summary
The government partially agrees, providing significant detail on the new Oil and Gas Fiscal Regime (OGPM), including its 35% rate, activation thresholds from 2026/27, and commitment to legislate next year. However, it confirms the OGPM will replace the Energy Profits Levy from March 2030 (or earlier if triggered), rejecting the recommendation to implement it sooner.
Government Response
Accepted in Part
HM Government
Accepted in Part
The government partially agrees with this recommendation. We recognise the importance of building long-term stability and certainty in the oil and gas tax regime. Autumn Budget 2025 announced that a new OGPM will replace the EPL when it ends in March 2030, or earlier if the EPL price floor triggers. A summary of stakeholder responses to the March 2025 consultation on the OGPM was also published alongside the Budget. The OGPM will adopt a revenue-based approach and deliver a fair return to the UK public when oil and gas prices are unusually high. The rate of the new tax will be 35%, For the 2026/27 tax year, the threshold prices which must be exceeded for the new tax to activate are $90/barrel (oil) and 90p/therm (gas). These thresholds will be adjusted annually in line with inflation. The government will also legislate for OGPM in next year’s Finance Bill to give the oil and gas sector further certainty and reassurance EPL is temporary. When the EPL ends, the headline rate of the tax regime will return to 40%, along with the introduction of the new OGPM which will only apply when prices are unusually high.