United Kingdom Oil and Gas Taxation


The current United Kingdom oil and gas taxation regime is complex and has arisen out of the many changes that have taken place since specific oil tax provisions were introduced in 1975. The UK government has recently been undertaking steps to simplify the regime with a view of making the UK more attractive for foreign investments although often such simplifications simply add another layer of complexity.

Until Finance Act 2016, there were three main elements of government take to which companies undertaking oil and gas exploration, development and production activities in the UK or the UK sector of the continental shelf have possibly been subject to being Corporation tax (CT), Supplementary Charge (SC) and Petroleum Revenue Tax (PRT). On 16 March 2016 the Chancellor announced a permanent reduction in the PRT rate to 0% with effect from 1 January 2016.

Corporation tax (CT) is levied at a rate of 30% on the upstream profits of the company as a whole, with those profits after certain adjustments also being subject to Supplementary Charge (SC) which is chargeable at 10% from 1 January 2016.

The marginal rate of these taxes is at present 40% but was 75% prior to 1 January 2016 for those fields which were subject to PRT.

Non-residents with activities in the UK or the UK sector of the Continental Shelf are also subject to Corporation Tax, at normal CT rate of currently 19% on profits from exploration and exploitation activities. The rate was reduced from 20% to 19% from 1 April 2017 and it is expected to be reduced to 17% by 2020.



Corporation Tax
Supplementary Charge
Petroleum Revenue Tax (PRT)
Field and Investment Allowances
Decommissioning Relief Deed

CW Energy LLP – April 2017 (based on the law which exists as at 1 April 2017)

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