Britain runs two windfall taxes. The Energy Profits Levy charges North Sea oil and gas producers 38% on top of ordinary field taxes, taking the headline rate to 78%, and runs to 31 March 2030. The Electricity Generator Levy takes 55% of exceptional generation receipts — a rate that rose from 45% for electricity generated on or after 1 July 2026.
The Energy Profits Levy
The EPL sits on top of the two existing North Sea taxes. Ring fence corporation tax is 30% and the supplementary charge 10%; the levy adds 38%, having risen by three percentage points on 1 November 2024. Together that is a headline rate of 78% on upstream oil and gas profits.
Be careful quoting this, because the government's own publication contains both numbers — 75% was the position before November 2024, and 78% is the position now. Both appear on the same page, which is how the older figure keeps circulating.
The levy's end date was extended from 31 March 2029 to 31 March 2030.
What happened to the investment allowance
The reform that changed behaviour was not the rate. The main 29% investment allowance was abolished for qualifying expenditure incurred on or after 1 November 2024, and nothing replaced it. Capital allowance claims, including first year allowances, were also restricted in computing levy profits.
One allowance survived. The Decarbonisation Investment Allowance was retained, with its rate cut from 80% to 66% — a reduction designed to preserve its cash value once the levy rate had risen. The policy signal is fairly explicit: relief for decarbonising production, not for extending it.
The price floor that could end it early
The Energy Security Investment Mechanism ends the levy early if prices fall far enough. It triggers where the six-month average price of both oil and gas sits at or below the thresholds — both, not either.
The original thresholds were $71.40 a barrel and 54p a therm, set on a twenty-year average to the end of 2022 and indexed to CPI each 1 April. The indexed figures since:
- Year to 31 March 2024 — $71.40 and 54p;
- Year to 31 March 2025 — $74.21 and 57p;
- Year to 31 March 2026 — $76.12 and 59p;
- Year to 31 March 2027 — $78.65 and 61p.
What replaces it in 2030
The successor is named, drafted and worth planning around. The Oil and Gas Revenue Levy is a permanent levy at 35% on revenues above thresholds of $90 a barrel for oil and 90p a therm for gas, indexed to CPI annually. It starts on 1 April 2030, or earlier if the ESIM brings the EPL to an end first.
Announced at Autumn Budget 2024 and consulted on in spring 2025, draft legislation was published on 13 July 2026 for Finance Bill 2026-27. The structural difference matters: the EPL taxes profits, the OGRL taxes revenues above a price threshold. A producer's exposure under the two is not comparable on a simple rate basis.
The Electricity Generator Levy
The EGL is the less discussed of the two and the one most often quoted at a stale rate. It applies to exceptional receipts from low-carbon generation, and the rate rose from 45% to 55% for receipts attributable to electricity generated on or after 1 July 2026, announced in a written ministerial statement on 21 April 2026.
The mechanics:
- Benchmark price — receipts above it are "exceptional". It is £82.61 per MWh for 1 April 2026 to 31 March 2027, adjusted annually for CPI from an original £75;
- Generation threshold — the levy reaches groups generating more than 50GWh a year;
- Allowance — it applies only to exceptional receipts exceeding £10 million per accounting period;
- Period — 1 January 2023 to 31 March 2028, with a stated government intention to extend it beyond 2028, to be legislated in due course.
In scope: nuclear, renewable, biomass and energy-from-waste generation. Excluded: electricity sold under a contract for difference with the Low Carbon Contracts Company, and imported electricity. The statutory basis is Part 5 of Finance (No. 2) Act 2023.
Note what the CfD exclusion does to the population caught. A generator with its output contracted under a CfD is largely outside the levy; one selling at merchant prices is not. Two physically similar wind farms can therefore have very different levy positions, and the contract is what decides it.
What this means in practice
For producers and generators, three things are worth doing. Check which rate applies to the period being computed rather than the period being filed — both levies have changed mid-stream, and the EGL change bites by reference to when electricity was generated. Model the ESIM thresholds against your own price assumptions, because an early end to the EPL changes a decade of forecasts. And for anyone with a post-2030 investment case, build it on the OGRL structure rather than extrapolating the EPL.
For everyone else, the useful takeaway is narrower: these are sector levies with defined perimeters, not a general tax on profitable businesses, and the "windfall tax" label gets applied far more widely than the legislation reaches.
Acumon advises energy and infrastructure businesses through corporation tax and business tax work, with financial modelling where a levy changes an investment case — see also our guide to corporate tax advice. If your generation receipts are near the £10 million allowance, the benchmark price for the current year is the number to model against.