If oil prices return to normal levels for an extended period of time, the government has announced that the windfall tax on oil and gas companies will be reduced.
If that occurred, it was stated that the tax rate on businesses would decrease from 75% to 40%.
Firms that profit from something for which they were not responsible are the target of a windfall tax.
It was introduced by the government last year to assist in financing its plan to reduce energy costs for homes and businesses.
Profits for energy companies have increased recently, first because of increased demand following the removal of Covid restrictions and then because energy prices increased as a result of Russia's invasion of Ukraine.
But since reaching their peaks, oil and gas prices have declined.
The windfall tax will remain in place until March 2028, according to a statement from the Treasury, but the rate will decrease if the average price of oil and gas falls to or below a predetermined level for two consecutive three-month periods.
Oil prices have been set at $71.40 per barrel and gas prices at £0.54 per therm.
