By Geoffrey Smith
Investing.com — The U.K. government is to impose a “temporary and targeted” windfall tax of 25% on the profits of oil and gas companies, Chancellor of the Exchequer Rishi Sunak said on Thursday.
Sunak said the tax scheme would raise over 5 billion pounds in revenue. The money will go in part to funding a broader package of income subsidies for lower-income families, aimed at relieving a growing cost-of-living crisis.
Setting out his proposals in the House of Commons, Sunak said the government will send a one-time 650-pound ($820) cost of living payment directly to around 8 million of the lowest-income households in the U.K. He also laid out plans for further handouts to pensioners and disabled people in the autumn, when regulated household energy prices are expected to show another steep increase.
The pound hit its highest in nearly three weeks on the news, rising 0.3% to $1.2605.
The shares of the two biggest U.K.-based oil and gas producers, BP (LON:BP) and Shell (LON:SHEL), shrugged off the news. BP stock rose 0.4% to its highest since February 2020, while Shell stock hit a three-year high with a gain of 0.6%.
The news had been largely anticipated.
U.K. To Impose “Temporary, Targeted” 25% Windfall Tax on Oil & Gas Profits