Background and guidance to interpreting oil and gas statistics
Updated 25 September 2024
© Crown copyright 2024
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/statistics/government-revenues-from-uk-oil-and-gas-production--2/background-and-guidance-to-interpreting-oil-and-gas-statistics
1. Guidance for this publication
This is a National Statistics publication produced by HM Revenue and Customs (HMRC). For more information on National Statistics and governance of statistics produced by public bodies please see the UK Statistics Authority website.
New or updated statistics in this release
Table 1 was extended by one year to include 2020 to 2021 receipts, with related charts also extended by one year. Revisions have been made to the previous two years’ figures as more tax return data is now available.
User engagement
We are committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so we can improve our official statistics and identify gaps in the statistics that we produce. If you would like to comment on these statistics or have any enquiries, please use the statistical contacts provided in this document.
Uses of the statistics
HMRC use these statistics to answer parliamentary questions and to inform policy decisions. Our users also use the statistics for media, research and forecasting purposes.
Statistical Contacts
- W. Waller; A. Dabak; [email protected]
- Media Enquiries - HMRC Press Office 03000 585 018; [email protected]
2. Key features of the oil and gas industry
Taxes and tax rates
Currently there are three main taxes which apply to the exploration and extraction of oil and gas from the UK and UK Continental Shelf. Details of the current taxes can be found below. Further information can be found in the Oil and Gas Taxation Manual on GOV.UK.
What is Ring Fence Corporation Tax?
This is calculated in the same way as the standard corporation tax applicable to all companies but with the addition of a ‘ring fence’ and the availability of 100% first year allowances for virtually all capital expenditure. The ring fence prevents taxable profits from oil and gas extraction in the UK and UK Continental Shelf being reduced by losses from other activities or excessive interest payments. The current rate of tax on ring fence profits is 30% and is set separately from the rate of mainstream corporation tax.
Table 2. Ring Fence Corporation Tax rates
| Rate period | Rate for Ring Fence Corporation Tax |
|---|---|
| 1 Jan 2002 to present date | 30% |
What is Supplementary Charge?
This is an additional charge on a company’s ring fence profits (but with no deduction for finance costs). Further information regarding the history of the rates of Supplementary Charge (SC) can be found in the table below.
Table 3. Supplementary Charge tax rates
| Rate period | Rate for supplementary charge |
|---|---|
| 17 April 2002 to 31 December 2005 | 10% |
| 1 Jan 2006 to 23 Mar 2011 | 20% |
| 24 Mar 2011 to 31 Dec 2014 | 32% |
| 1 Jan 2015 to 31 Dec 2015 | 20% |
| 1 Jan 2016 to present date | 10% |
What is the Petroleum Revenue Tax?
This is a field-based tax (as opposed to company-based tax, as in the case of Ring Fence Corporation Tax (RFCT)) charged on profits arising from oil and gas production from individual oil and gas fields which were given development consent before 16 March 1993. With effect from 1 January 2016, the Petroleum Revenue Tax (PRT) rate was reduced to 0%. It has not been abolished, as companies can still generate repayment of historic taxes. PRT is a deductible expense in computing profits chargeable to RFCT and SC. Similarly, PRT repayments are treated as income in RFCT or SC tax calculations.
Table 4. Petroleum Revenue Tax rates
| Rate period | Rate for Petroleum Revenue Tax |
|---|---|
| 1 Jan 1975 to 31 Dec 1992 | 75% |
| 1 Jan 1993 to 31 Dec 2015 | 50% |
| 1 Jan 2016 to present date | 0% |
Decommissioning of UK oil and gas infrastructure
The Oil Taxation Act 1975 allows participators in an oil and gas field liable to Petroleum Revenue Tax to carry-back losses almost indefinitely against profits it has previously made from the field, or which previous participators in the field had made. This may result in the repayment of tax.
Offshore Corporation Tax is comprised of Ring Fence Corporation Tax and Supplementary Charge. The Corporation Tax Act 2010 allows for a company’s decommissioning loss to be carried back against its own historical profits dating back to April 2002. Again, this may result in a repayment of tax.
3. Methodology
Table 1 is updated from the latest receipts data held on HMRC’s accounting records.
For Corporation Tax (CT), the initial payment of a large percentage of instalments into the HMRC group payment accounts are recorded as ring fence UK oil and gas receipts but these figures can be revised when the group payments are distributed between liabilities for participating companies. HMRC are now asking selected companies to provide details of the proportion of their payments relating to non-ring fence charges so our initial recording of receipts relating to exploration and production operations is more accurate but there are still likely to be small adjustments when liabilities are finalised. The CT are recorded using a link to the HMRC CT system which holds all payment records.
In the tax year 2015 to 2016 changes were made to the collection of Corporation Tax receipts data and therefore from this date we can disaggregate total net Corporation Tax between tax payments and repayments. Therefore, from the tax year 2015 to 2016 onwards we can provide a more accurate estimate of payments of Ring Fence Corporation Tax and Supplementary Charge as Corporation Tax payments are reported separately from Corporation Tax repayments.
Petroleum Revenue Tax (PRT) payments/repayments data are downloaded from a system which records PRT assessments raised by HMRC Large Business – PRT Team.
The National Audit Office (NAO) undertake a yearly audit of Petroleum Revenue Tax and Corporation Tax receipts to ensure accurate recording. Recording of Petroleum Revenue Tax receipts is reconciled on a monthly basis with figures produced by HMRC’s Finance directorate, as recommended by NAO.
The statistics are consistent with publications released by the Office for National Statistics (ONS), Oil and Gas Authority (OGA) and the Office for Budget Responsibility (OBR).
4. Table Guidance
Table 1: Government revenues from UK oil and gas production
Table 1 shows receipts from all taxes levied on exploration and production activities of oil and gas from the UK and the UK continental shelf.
Footnotes to table
- Revenues in Table 1 are presented on a cash receipts basis (i.e. recorded in the period they are received by HMRC, as opposed to the National Accounts Basis used by the ONS.
- Figures for Corporation Tax (CT) for tax year 2019 to 2020 and 2020 to 2021 are provisional and subject to change in the future when payments originally made in respect of a group of companies are subsequently re-allocated to individual companies within the group, but which are outside of the ring fence oil and gas regime.
- Analysis of tax returns is used to estimate the annual proportional split between Ring Fenced Corporation Tax (RFCT) and Supplementary Charge (SC) for years until 2015 to 2016. This split is applied to total net CT.
- From January 2016, the rate of Petroleum Revenue Tax (PRT) was permanently set to zero. From this date no PRT payments are due. Companies can continue to carry back losses against earlier years’ profits which may result in a repayment of PRT.