UK oil and gas revenues slide as North Sea operators withdraw
Today’s government revenues from UK oil and gas production for September 2025 published by HMRC show a decline of £1.6bn in the financial year 2024 to 2025 to £4.5bn, compared with £6.1bn in 2023 to 2024.
Energy Profits Levy receipts decreased by 20% (£0.7bn) for the same period, with Offshore Corporation Tax receipts also seeing a 34% decline of £1bn.
Sheena McGuinness, Co-Head of Energy and Natural Resources at RSM UK, said: “The latest data on UK oil and gas revenues shows a sharp downtick, in line with falling oil and gas prices and declining production. We’ve recently seen a number of major oil producers exiting the North Sea or announcing significant divestments, with many citing the Energy Profits Levy (EPL) as a key driver in making the region less attractive for investment due to the high tax burden. We also saw energy businesses announce further jobs cuts earlier this year due to the government’s position on the windfall tax, compounded by a challenging regulatory environment, leading to lower staffing levels which aligned with lower investment levels. It is therefore no surprise that EPL revenues also continue a downward trend, further squeezing the government’s spending powers.
“While the headline rate of tax on upstream oil and gas activities was increased to 78% in November 2024, this has not offset the impact of declining production and investment. In addition, new analysis suggests the government’s aim to transition away from North Sea oil and gas production to clean energy generation will result in £10bn in lost tax revenue by 2030. Aside from the fiscal impact of falling tax revenues, the transition to net zero remains slow and uncertain, particularly the rollout of GB Energy, which, given recent job cuts in the energy sector, may narrow the pool of skilled workers available to deliver clean energy. Similarly, the cancellation of Hornsea 4 and other renewables projects highlights the financial challenges facing the sector, with clean energy investments often generating fanfare, but falling short of meaningful progress.”
She added: “To secure the UK’s position as a ‘clean energy superpower’, the government should replace the current EPL tax framework with a new regime which is conducive to growth and investment, similar to that put forward by Offshore Energies UK to tax extraordinary profits, rather than taxing everything. To support this, businesses are still waiting for the Clean Energy Workforce Strategy, which will provide clarity on how the government will help reskill and redeploy workers from traditional energy sectors, address skills shortages, and ensure a talent pipeline to deliver clean energy.”