Following months of rumours and speculation not just about the fiscal headroom but the survival politics of Reeves, and by extension the Prime Minister, the Budget has been framed by Labour as furthering their vision of fiscal stability paired with targeted investment, with “fair and necessary” taxation measures to rebuild the economy. Headline announcements include freezing income tax and National Insurance thresholds until 2031, new levies on high-value property and savings, and a mileage charge for electric vehicles from 2028. In a concession to backbench pressure, the two-child benefit cap will be scrapped from April 2026, alongside measures to ease the cost of living—£150 off household energy bills, a continued fuel duty freeze, and increased NHS funding, youth employment guarantees, and infrastructure investment.

Business reaction has been mixed: welcoming investment in skills and infrastructure but warning that threshold freezes and pension changes amount to stealth taxes, adding pressure on margins and dampening confidence.

A “bitter blow” for the offshore sector

In particular the Budget delivers significant changes for the offshore sector and the North Sea. The Chancellor confirmed that the Energy Profits Levy—currently set at 78%—will remain in place until March 2030, despite strong industry lobbying for an earlier end. While a price floor mechanism ensures the levy will fall away if oil and gas prices drop sharply, the government has also announced a permanent Oil and Gas Price Mechanism from 2030. This will impose an additional 35% tax on revenues when prices exceed defined thresholds, intended to create a long-term safeguard during periods of high commodity prices.

In terms of licensing, the government will stop issuing new exploration licences for fresh oil and gas fields, signalling a decisive shift away from fossil fuel expansion. However, limited production will continue through Transitional Energy Certificates for tie-back projects linked to existing fields.

Alongside these measures, a North Sea Future Plan has been unveiled, promising a “fair and managed transition” for workers and communities. This includes support for jobs and retraining, as well as investment in clean energy technologies such as offshore wind, carbon capture and storage, and hydrogen.

The UK Chamber and BROA supports wider offshore industry condemnation of the decision, labelled a “bitter blow”, which is forecast to cost tens of thousands of jobs, cripple investment, see capital flight and undermine Scotland and the UK’s energy security. The limited flexibility that has been provided by the permitting of licensing tie-backs is insignificant if the companies producing the energy are exposed to 78% tax rate under the EPL until 2030.

BROA is especially concerned that the offshore supply chain, which supports oil and gas, construction and renewables, will substantially decline from the UK as investment in oil and gas cross-subsidises the other parts of the supply chain. This will inevitably hamper the UK’s targets for broader offshore energy projects across wind, CCS and offshore hydrogen, leading to delays, higher costs and greater reliance upon imports.  

Key Takeaways for the Sector

Offshore & North Sea

• The Energy Profits Levy remains until 2030, despite industry calls for its removal. From 2030, a new Oil & Gas Price Mechanism will impose an additional 35% tax on revenues above set price thresholds.
• The government will end new exploration licences for fresh oil and gas fields, allowing only tie-back projects linked to existing fields. A North Sea Future Plan promises a “fair and managed transition” for workers and communities.
• Industry reaction has been sharply critical, warning of job losses, reduced investment, and a less competitive fiscal regime.

Support for Nuclear Energy

• Nuclear remains central to the UK’s net-zero strategy, with commitments to faster approvals, streamlined regulation, and green finance access.
• Funding for Sizewell C, SMRs, fusion research, and carbon capture clusters was confirmed, alongside measures to shift some renewable costs from bills to taxation and boost home energy efficiency.
• Delivery risks and high costs remain a concern.

Visitor Levy

• Regional mayors in England will gain powers to introduce a visitor levy on overnight stays (£1–£5 per night) to fund local transport and tourism infrastructure.
• While not directly impacting shipping, we will monitor potential implications for cruise visitor charges, following similar consultations in Scotland.

Wider Measures

• Business Property Relief: From April 2026, APR/BPR becomes transferable between spouses or civil partners, even if the first death occurred before that date. Caps remain, leaving larger estates exposed.
• Fiscal & Business Environment: Changes to business taxes, rates, and regulation will broadly affect operating conditions.
• Skills & Employment: No further extension of SMarT funding was announced, though wider apprenticeship and training measures, and Youth Guarantee funding may benefit the sector.
• Greening Infrastructure: Additional regional funding for ports and decarbonisation projects, alongside UK ETS updates.
• Defence Spending: Plans reaffirmed to raise defence spending to 2.6% of GDP by 2027, with ambitions for 3% and 5% by 2035. Significant investment in nuclear submarine programs, munitions, and emerging technologies, plus a £400m Defence Innovation Fund and expanded export finance for UK defence industries.

The Chamber will analyse the full package and engage members and wider stakeholders, to shape the industry response and next steps on key agendas. 

You can see our full submission here and for more information please contact Stef Kenyon