Country Report

United Kingdom upstream fiscal summary

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28 June 2018

United Kingdom upstream fiscal summary

Report summary

All upstream projects in the UK are governed by concessions. Licences are awarded in regular rounds with fixed fiscal terms. Over the years, the tax system has seen numerous changes. Most recently, lower oil prices and maturity of the UK Continental Shelf have played a decisive role in radical tax cuts. The UK now has one of the most competitive fiscal systems globally. Ring Fence Corporation Tax (RFCT) applies at the rate of 30%. In addition, a 10% Supplementary Charge (SC) applies to the adjusted RFCT profit. Additional deductions are available for RFCT and SC.The UK has also one of the most elaborate tax treatments of decommissioning costs in the world. Most of the legislation is already in place but the industry actively cooperates with the government to resolve remaining issues. Transferrable Tax History (TTH) has been the most important initiative recently. It will allow buyers with no tax history in the UKCS to secure relief on future decommissioning losses.

Table of contents

  • Executive summary
    • Basis
    • Licence terms
      • (Offshore) Innovate Licence
      • (Onshore) Petroleum Exploration and Development Licence
    • Government equity participation
    • Fiscal terms
      • Ring fencing
      • Bonuses, rentals and fees
      • Indirect taxes
      • Royalty
      • Ring Fence Corporation Tax (RFCT) and Supplementary Charge (SC)
        • RFCT deductions
        • Capital Allowance (Depreciation)
        • Supplementary Charge deductions
      • Fiscal treatment of decommissioning
        • Tax rules
        • Transferrable Tax History (TTH)
      • Product pricing
      • Summary of modelled terms
    • Recent history of fiscal changes
    • Stability provisions
    • Split of the barrel and share of profit
    • Effective royalty rate and maximum government share
    • Progressivity
    • Fiscal deterrence

Tables and charts

This report includes 17 images and tables including:

  • Executive summary: Image 1
  • Timeline
  • Timeline detail
  • Split of the barrel - oil
  • Split of the barrel - gas
  • Share of profit - oil
  • Share of profit - gas
  • Effective royalty rate - onshore, shelf and deepwater, oil and gas
  • Maximum government share - onshore, shelf and deepwater, oil and gas
  • State share versus Pre-Share IRR - oil
  • State share versus Pre-Share IRR - gas
  • Investor IRR versus Pre-Share IRR - oil
  • Investor IRR versus Pre-Share IRR - gas
  • Bonuses, rentals and fees
  • Area rentals
  • Indirect taxes
  • Assumed terms by location - oil and gas

What's included

This report contains:

  • Document

    United Kingdom upstream fiscal summary

    PDF 292.96 KB