Policy paper

Oil and Gas Revenue Levy (OGRL)

Published 13 July 2026

Who is likely to be affected 

Oil and gas companies that operate in the UK or on the UK Continental Shelf (UKCS). 

General description of the measure 

The UK oil and gas fiscal regime taxes profits earned by companies from the production of oil and gas in the UK and on the UKCS. The regime is kept separate to other taxes on commercial profit by the operation of a ‘ring fence’ which prevents losses from other activities being imported into the regime. 

This measure introduces a new permanent levy called the Oil and Gas Revenue Levy (OGRL). The levy will only apply during periods of high prices and will be charged at 35% on the portion of revenue from sales of oil or gas that exceed specified thresholds.

This is in addition to Ring Fence Corporation Tax (RFCT) which is charged at 30% and the Supplementary Charge (SC) which is charged at 10%.

The OGRL will replace the existing Energy Profits Levy (EPL) once it ends, either on 31 March 2030 or earlier if the Energy Security Investment Mechanism (ESIM) is triggered.

Policy objective 

The objective of this measure is to introduce a permanent levy that:

• ensures the UK receives a fair return from its oil and gas resources during periods of unusually high prices
• provides a stable and predictable fiscal framework that supports continued investment and minimises distortions and administrative burdens

Background to the measure 

At Autumn Budget 2024, the government announced its intention to introduce a permanent levy, the OGRL, to replace the EPL which is due to end on 31 March 2030 or earlier if the ESIM is triggered. The OGRL will respond automatically to periods of unusually high prices, providing greater certainty over the long-term fiscal framework. 

The government consulted on the design of the new levy in Spring 2025. Following engagement with industry and stakeholders, the government published a summary of responses at Budget 2025.  

In Spring 2026, the government continued to engage with stakeholders on the detailed design of the OGRL, Draft legislation was published on 13 July 2026 ahead of legislation in Finance Bill 2026-27.

Detailed proposal 

Operative date 

This legislation can have effect following Royal Assent to Finance Bill 2026-27. It will apply to revenues arising on or after the date of commencement, being the date immediately after EPL ceases to have effect. This will be 1 April 2030, or if the ESIM is triggered the OGRL will commence immediately following the point where the EPL ceases.

The OGRL will apply only from the point at which EPL ceases to have effect, ensuring there is no overlap between the two regimes, providing continuity in the fiscal framework during periods of high oil and gas prices.

Current law  

This is new legislation and there is no current law on the OGRL. However, the legislation draws from similar concepts from the existing ring fence tax regimes in Part 8 of Corporation Tax Act 2010. 

Proposed revisions 

The OGRL will be a revenue-based levy with a rate of 35% and will only apply to revenues from oil and gas sales above defined price thresholds. These thresholds are currently:

• $90 per barrel for oil
• 90p per therm for gas

These thresholds will be adjusted each financial year by reference to changes in the Consumer Prices Index (CPI).

The Finance Bill will introduce legislation to establish the OGRL as a new permanent levy within the UK upstream oil and gas fiscal regime.

The OGRL will apply:

• to companies carrying on a ring fence trade
• where the realised price of oil or gas exceeds the published threshold with liability calculated by reference to the excess above that threshold

The legislation will set the following key design features:

• the OGRL calculation will use monthly reference periods, with prices to be averaged over a month to determine whether the threshold is exceeded
• only revenues from the sale of oil and gas will be within scope, excluding other forms of ring fence income
• OGRL will operate as a standalone charge, calculated separately from other ring fence taxes, with no group relief provisions and no carry back or carry forward of losses 
• companies will be required to allocate transactions to monthly periods on a fair and reasonable basis, applied consistently

The legislation will also align OGRL with the existing administrative framework for Corporation Tax and ring fence taxes. The OGRL will be administered as if it was Corporation Tax, bringing it within existing administrative provisions, and applying the instalment payments regime for large companies within the ringfence.  

OGRL will not be deductible in calculating profits for the purposes of other taxes.

Summary of impacts 

Exchequer impact (£ million) 

2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031	2031 to 2032
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact. The final costing will be subject to scrutiny by the Office for Budget Responsibility.

Macroeconomic impact 

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families 

There are not expected to be impacts on individuals as this measure only affects businesses. 

Equalities impacts 

This measure only affects businesses. It is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics. 

Administrative impact on business including civil society organisations 

This measure will have a negligible impact on up to 200 companies operating in the UK or on the UK Continental Shelf.  

One-off costs will include familiarisation with these changes. Continuing costs will include monitoring of monthly oil and gas sales prices to determine whether they are liable for OGRL. 

Customer experience is expected to remain broadly the same following these changes as it does not alter how businesses would interact with HMRC. 

This measure is not expected to disproportionately impact on civil society organisations.

Operational impact (£ million) (HMRC or other) 

HMRC operational impacts are estimated at £2 million. 

Other impacts 

Environmental impacts have been considered. While no substantive impact on territorial UK oil and gas consumption is anticipated, there is the potential that the level of investment companies make in relation to upstream oil and gas projects in the UK may be impacted.  

Other impacts have been considered, and none have been identified.

Monitoring and evaluation 

This measure will be monitored through information collected from companies’ tax payments and returns. 

Further advice 

If you have any questions about this change, contact the oil and gas policy team by email: oilandgaspolicy@hmrc.gov.uk.