Tax Planning
Strategic Tax Insights: Navigating the New Oil & Gas Revenue Levy
A permanent tax called OGRL will apply in high-price periods—this article unpacks thresholds, definitions, and planning for UK upstream energy companies.
By NomadicTax Research Team • 5-8 min read • August 15, 2026
## What is the Oil & Gas Revenue Levy (OGRL)?
The **Oil and Gas Revenue Levy (OGRL)** is a new permanent levy designed to replace the existing Energy Profits Levy (EPL) when it ends, either on **31 March 2030** or earlier, if the **Energy Security Investment Mechanism (ESIM)** is triggered. It will activate when revenues from oil or gas exceed specified thresholds. The tax rate is **35 %** on the portion of revenues above those thresholds. Draft legislation was published on **13 July 2026**. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy?utm_source=openai))
## Key Features and Thresholds
- **Thresholds** are $90 per barrel for oil and **90p per therm** for gas. These thresholds will be adjusted annually using the December CPI. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy?utm_source=openai))
- Only revenues from sales of oil and gas are in scope, excluding other ring-fence income. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy/oil-and-gas-revenue-levy-ogrl?utm_source=openai))
- No carry-forward or carry-back of losses under the new regime; separate from corporation tax. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy/oil-and-gas-revenue-levy-ogrl?utm_source=openai))
## When it Comes into Force
- OGRL takes effect from the date the EPL ceases, either **1 April 2030**, or earlier if ESIM decides. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy/oil-and-gas-revenue-levy-ogrl?utm_source=openai))
## Planning Implications
- **Monitor commodity markets closely**: when oil or gas prices breach thresholds, incremental revenues become taxed more heavily.
- Companies should adjust **investment, production and hedging strategies** around those thresholds.
- Capital expenditure planning should take into account that costs will no longer reduce liability under OGRL; revenue above threshold becomes the taxable base.
## Example
SeaCo Oil plc generates revenue of £150 million from oil sales in a particular period when oil prices average $110/barrel. The threshold is $90, so the **excess revenue** taxed under OGRL is calculated on revenue attributable to the $20/barrel excess. This could translate to a significant extra tax liability depending on volume sold above threshold.
## Compliance & Reporting
- Levy treated like corporation tax in many administrative respects (returns, instalments, payment deadlines) but is **not deductible** against other taxable profits. ([gov.uk](https://www.gov.uk/government/publications/oil-and-gas-taxation-oil-and-gas-revenue-levy/oil-and-gas-revenue-levy-ogrl?utm_source=openai))
- Monthly reference periods and averaging of prices will apply, meaning companies must track sales and revenues carefully.
## Strategic Advice
- Use scenario planning to assess the risk of crossing thresholds in any given financial period.
- Consider accelerating production and sales into periods with prices just below thresholds to avoid OGRL exposure.
- Consult tax and accounting advisers regarding impacts on cashflow, as burden may increase sharply when thresholds are exceeded.
## Conclusion
OGRL represents a major change in the upstream oil & gas fiscal regime—it retains the counter-cyclical approach of EPL but formalises it into a permanent structure. Good forecasting, cost control and strategic planning will be vital to manage its introduction successfully.