Windfall profits tax – is now the right time?

In recent weeks energy companies have seen a dramatic soar in their profits due to the increase in oil and gas trading post-pandemic and also as a result of Russia’s invasion of Ukraine. As such the UK government has come under pressure from MPs to introduce a windfall profits tax on these energy companies. The purpose would be to tax profits that companies have made as a result of external circumstances beyond their control – in other words to tax luck not labour.

Previous windfall profits taxes

Windfall profits taxes have been imposed in the UK before. In 1997 the Labour government introduced a windfall profits tax on the excess profits of privatised utilities. Utility companies at the time were experiencing a windfall gain due to under-pricing of shares and the under-regulation of the sector. Previously in 1981 the Conservative government introduced a...