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)
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)
- Only revenues from sales of oil and gas are in scope, excluding other ring-fence income. (gov.uk)
- No carry-forward or carry-back of losses under the new regime; separate from corporation tax. (gov.uk)
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)
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)
- 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.