The UK government introduced a temporary tax on oil and gas companies that have made high profits due to increasing energy prices caused by the war between Russia and Ukraine.
The tax on energy companies is part of a larger package of new measures to support families with the cost of living amid the highest inflation in 40 years, the UK’s Finance Minister Rishi Sunak said in Parliament on Thursday.
The money collected through the levy will help to share the cost of living for citizens in the UK.
'We are introducing a temporary, targeted Energy Profits Levy charged on profits of oil and gas companies at a rate of 25%,' Sunak said.
The oil and gas sector is making 'extraordinary profits,' due to 'surging global commodity prices driven in part by Russia's war,' he added.
The levy, also referred to as a windfall tax, will recover some of the gains oil and gas producers made as a result of high energy prices.
Sunak said that the levy will be phased out once energy prices return to normal levels and it is not expected to deter company projects
'Our targeted, temporary energy levy ensures companies can continue to invest, whilst we support those who need it,' he explained.
By Zeynep Beyza Kilic