Chancellor Rachel Reeves is understood to be considering axing the windfall tax on the UK’s oil and gas industry earlier than expected.

Reports suggest the Treasury is floating using her Autumn Budget on November 26 to end the energy profits tax in March 2029.

This would effectively reverse a decision made in last year’s fiscal statement to extend it by one year, until March 2030, The Financial Times reports.

Introduced by former Conservative Chancellor Jeremy Hunt, the Energy Profits Levy has targeted oil and gas firms on the basis that these companies were benefits from profits far beyond normal levels due to the price chock resulting from Russia’s invasion of Ukraine.

Initially, the levy added a 25 per cent charge on top of the existing tax regime but has since been increased in stages to 38 per cent.

Critics note that this means the overall effective tax rate on North Sea production now sits at roughly 78 per cent.

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