Petroleum Revenue Tax

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Petroleum Revenue Tax (PRT) is a direct tax collected in the United Kingdom. It was introduced
under the Oil Taxation Act 1975, soon after Harold Wilson's Labour government returned to
power and in the immediate aftermath of the 1973 energy crisis, and was intended to ensure
"fairer share of profits for the nation" from the exploitation of the UK's continental shelf, while
ensuring a "suitable return" on the capital investment by oil companies.

PRT is charged on "super-profits" arising from the exploitation of oil and gas in the UK and the
UK's continental shelf. After certain allowances, PRT is charged at a rate of 50% (falling to 35%
from 1 Jan 2016 and was effectively abolished in the March 2016 budget)[1] on profits from oil
extraction. PRT is charged by reference to individual oil and gas fields, so the costs related to
developing and running one field cannot be set off against the profits generated by another
field. PRT was abolished on 16 March 1993 for all fields given development consent on or after
that date, but continues in existence for fields established before that date. At the same time,
the rate of PRT was reduced from 75% to 50%, but various reliefs from PRT for expenditure on
exploration and appraisal were withdrawn.

PRT is charged in addition to corporation tax, which is also payable by companies involved in oil
exploration and production, although PRT is deductible in calculating profits for corporation tax
purposes. Profits from oil extraction activities are subject to a corporation tax "ring fence", which
means that profits from these activities cannot be reduced by any losses or other tax reliefs from
other business activities (the corporation tax ring fence fences off the whole oil exploration
trade, not individual fields like PRT). Profits within the corporation tax "ring fence" have been
subject to a supplementary corporation tax charge of 10% in addition to the usual 30% rate since
17 April 2002. This supplementary charge was increased to 20% in the Pre-Budget Report of
December 2005, with effect from 1 January 2006, and was further increased in the 2011 budget
to 32%, with effect from 23 March 2011. This means that the marginal tax rate on PRT paying
fields is now 81% (fields not paying PRT pay a rate of 62%).[2][3][4]

PRT is administered by the Energy Group of the Large Business Service of HM Revenue and
Customs (formerly the Oil Taxation Office of Inland Revenue). This group also administers the
"ring fence" corporation tax and supplementary charge paid by companies on profits from oil
and gas production, and previously administered the royalty charged on the gross value of oil
and gas won.[citation needed]

See also

Minerals Resource Rent Tax (2012), a tax on profits generated from the mining of non-renewable
resources in Australia

References

"Budget 2016 summary: Key points at-a-glance".

"Tax Debt Crisis Institute". Tax Foundation. Archived from the original on July 7, 2017. Retrieved
July 7, 2017.

Bluey, Rob (February 19, 2012). "Chart of the Week: Nearly Half of All Americans Don't Pay
Income Taxes". Heritage Foundation. Retrieved July 7, 2017.

Will Freeland; Scott A. Hodge (July 20, 2012). "Tax Equity and the Growth in Nonpayers". Tax
Foundation. Retrieved July 7, 2017.

Oil Taxation Manual

Taxation of UK oil production (as at April 2003)

The North Sea Fiscal Regime (as at April 2003)

External links

Energy Group (formerly Oil Taxation Office)

vte

Energy in the United Kingdom

Categories: Taxation in the United KingdomPetroleum in the United Kingdom