Energy Price Levy continue to fall as downward trend set to break
Today’s HMRC monthly tax receipts show energy profit levy revenues are down from £952m in January 2025 to £690m this year.
Commenting on the latest figures, Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK said: “The downtick in Energy Profit Levy (EPL) revenue continues the historic downward trend as restrictions to oil field licences and steep additional taxes on oil-related activity continue to hit investment in the UK energy sector and, in turn, associated tax revenues. However, we may see this trend break soon, as geopolitical unrest has the potential to increase oil prices further.
“Increasing oil prices would in turn make renewables more attractive if the economics of oil no longer work, but the UK is not currently in a place to facilitate a widespread switch to renewables as we are behind the curve in terms of net zero readiness. This is evidenced by £363m curtailment payments made in 2025, when offshore wind producers were paid not to produce electricity. These are the costs of balancing a system not designed for today’s generation geography or production. If oil prices do go up, we will become increasingly reliant on a system that is not fit for today’s energy needs.
“For the first time since the 1960s, no exploration wells were drilled last year, and investment is forecast to fall 40% by the end 2026. The EPL has a large impact on the dwindling North Sea oil production, which has become internationally uncompetitive as we currently have no windfall conditions. However, we might see a reversal of this in the coming months.”