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<p>The Government introduced the Energy Profits Levy (EPL) to respond the exceptional
profits being made by the oil and gas sector driven by global circumstances. The EPL
is a temporary 35 per cent surcharge on the exceptional profits being made by the
sector and comes on top of the default 40 per cent headline tax rate applied to profits
from UK oil and gas production, bringing the overall combined tax rate to 75 per cent.
The EPL will end in 2028 if the Energy Security Investment Mechanism (ESIM) is not
triggered.</p><p>Additionally, the Government introduced the Electricity Generator
Levy (EGL), a temporary 45% tax on extraordinary returns made by some UK electricity
generators from 1 January 2023. The levy will end in 2028. EGL is applied to extraordinary
returns defined as selling electricity for a period at an average price of more than
£75/MWh, which is approximately 1.5 times the average price of electricity over the
last decade and well beyond pre-crisis expectations.</p><p>At its most recent forecast,
the OBR forecasted that together, the EPL and EGL would raise approximately £40 billion
while in force. This significant source of tax revenue has helped fund vital cost
of living support.</p><p> </p>
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