The UK government has introduced a price floor for the windfall tax on oil and gas producers, arguing that it is necessary to support investment and boost the country’s energy security.
The tax rate, which was raised to 75 per cent last year at the peak of the energy crisis, will revert to the pre-crisis level of 40 per cent if oil and gas prices fall below their long-term average under the so-called Energy Security Investment Mechanism.
The floor has been set at $71.40 for crude oil and £0.54 a therm for gas. Both would need to average below that level for two consecutive quarters to trigger the reduction in the tax rate.
