An Energy Profits Levy (EPL), widely called the windfall tax, was levied on oil and gas companies operating in the UK in May 2022, in response to record oil and gas industry profits and the rapid increase in energy costs following the Russian invasion of Ukraine1. The measure sits within the wider regulation and policy framework that governs how household energy bills are set and supported.
The tax was introduced against a backdrop of steep increases in the energy price cap, the default tariff limit set by Ofgem1. The End Fuel Poverty Coalition records that the government has committed to phasing out the tax by 2030, to be replaced by a new tax regime for the sector1. It has also called for the levy to be retained, with any successor mechanism raising revenue at a comparable level1.
Public opinion recorded by the coalition points to support for the measure. Twice as many people in Scotland (41%) support the windfall tax as oppose it (19%), with support cutting across all political parties and across all parts of the country1. A separate survey by Survation for the coalition found that 35% of the public have become more interested in home energy technology since the Iran conflict began1.
The coalition's wider research, carried out by Opinium among 2,000 UK adults between 29 May and 1 June 2026, recorded that 83% of the public are worried about energy bills and that 44% said they would be unable to afford an expected £228 annual increase in energy bills from 1 July1. In the same body of work, 9% said they were behind on payments to their energy supplier, equivalent to around 5 million people nationally, and a further 22%, around 12 million people, were worried about falling behind1.
"An Energy Profits Levy (EPL) or 'Windfall Tax' was levied on oil and gas companies operating in the UK in May 2022 in response to record oil and gas industry profits and the rapid increase in energy costs following the Russian invasion of Ukraine."
Why it matters for households
The levy is a tax on producers, not on bills, so it does not change the unit rates a household pays. What it does is set the terms on which the state captures part of the revenue that high wholesale prices generate for oil and gas producers, and the coalition argues that money should be directed at bill support and home upgrades1. Its recommendations include a permanent energy debt relief scheme funded through energy sector excess profits, automatic support for vulnerable households, a social tariff for energy and reforms to the Warm Home Discount1.
For a home's energy independence, the debate turns on whether revenue from the levy is used to reduce exposure to gas prices. The coalition's submission urges the Chancellor to retain the levy and to ensure any successor raises revenue at a comparable level1. Its coordinator, Simon Francis, said a concerted national effort to get off gas and heating oil would make a difference, including breaking the link between electricity prices and the gas market1. The coalition also wants confirmation that the VAT reduction on electricity, from 5% to 0% from 1 October, will not lapse on 31 March 20271.
What happens next
The government has committed to phasing out the Energy Profits Levy by 2030, to be replaced by a new tax regime for the sector1. The coalition has asked the Chancellor to retain the levy in the meantime and to recover a separate windfall it says energy network companies received, if it is not returned to consumers voluntarily1. No date has been reported for the introduction of the successor regime.
Sources1 cited
- Reports Archives - End Fuel Poverty Coalition, endfuelpoverty.org.uk