Methodology note
Repeal the Energy Profits Levy: calculation note
Scenario assumptions behind the Repeal the Energy Profits Levy estimate. The figures are illustrative and exclude unrelated Conservative pledges.
Central fiscal result
+GBP 2.2bn - Net fiscal impact in 2028-29
Low case: +GBP 0.5bn. High case: +GBP 5.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.
Scenario and baseline
- Model early repeal of the Energy Profits Levy by 2028-29.
- Central cost is GBP 2.2bn lost receipts.
- Baseline levy rate is 38 percent with expiry in 2030.
- New licensing is modelled separately.
Affected population
- Affected population is UK upstream oil and gas producers.
- Direct beneficiaries are firms with taxable North Sea profits.
- Indirect exposure includes supply-chain workers and Treasury receipts.
- Consumers are not treated as direct beneficiaries.
Gross impact
- Central lost levy receipts: GBP 2.4bn.
- Investment and corporation-tax offset: GBP 0.2bn.
- High case assumes strong prices and high foregone receipts.
- No consumer-bill reduction is scored.
Fiscal build-up, central case
- Lost EPL receipts: +GBP 2.4bn
- Higher corporation-tax receipts: -GBP 0.1bn
- Investment-related receipts: -GBP 0.1bn
- Administration savings: GBP 0.0bn
Central net impact: +GBP 2.2bn in 2028-29.
Behaviour and pass-through
- Low case assumes low prices and weak profits.
- Central case assumes moderate receipts and modest investment response.
- High case assumes high prices and substantial foregone revenue.
- Investment response is not assumed to self-finance repeal.
- Consumer prices follow wholesale markets, not levy incidence.
Phasing
- 2026-27: +GBP 0.4bn. Preparation or partial implementation.
- 2027-28: +GBP 1.8bn. Main ramp-up year.
- 2028-29: +GBP 2.2bn. Target-year central estimate.
- 2029-30: +GBP 2.2bn. Continuation at steady-state assumptions.
Main source groups
- con-plan-2026: Conservative live policy page; used to identify current pledge wording.
- epl-2024: Energy Profits Levy policy note; current levy rate and revenue effects.
- obr-efo-oct-2024: OBR October 2024 forecast; fuel-duty, energy and oil-gas receipts.
- obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
- mirrlees-2011: Tax design principles; informs behavioural and incidence assumptions.
- saez-slemrod-giertz-2012: Taxable-income responses; informs behavioural and incidence assumptions.