Will the UK Energy Windfall Tax be suspended?

With energy prices falling, it seems as though the government are on the point of suspending the recently introduced windfall tax. The higher rate windfall tax was introduced last year in response to higher energy prices as a result of the Ukraine war.

As things stand, the article makes it clear that "Oil and gas firms operating in the North Sea pay 30% corporation tax on their profits and a supplementary 10% rate on top of that. The windfall tax - or Energy Profits Levy - is set at 35%, taking the overall tax rate faced by oil and gas companies to 75%."

If energy prices are seen to normalise, that will return to a 40% tax rate.

Here is a fairly blunt example of opportunity cost - in this case, in the context of the UK government's support package during last winter's energy crisis. The National Audit Office estimates that the Energy Price Guarantee has cost almost £40bn. It is a not inconsiderable sum.