Accredited official statistics

Government revenues from oil and gas production September 2024

Updated 25 September 2024

Statistics of government revenues from UK oil and gas production September 2024

1. About this release

This publication contains statistics of government revenues from UK oil and gas production.

2. Key findings

The headline findings in this year’s publication are that:

• total revenues from UK oil and gas production were £6.1 billion in financial year 2023 to 2024, compared with £9.0 billion in 2022 to 2023, a reduction of £2.9 billion (32%)
• offshore Corporation Tax (CT) receipts (net of repayments), comprising Ring Fence Corporation Tax (RFCT) and Supplementary Charge (SC), decreased from £6.6 billion in 2022 to 2023 to £3.0 billion in 2023 to 2024
• Energy Profits Levy (EPL) receipts increased from £2.6 billion in 2022 to 2023 to £3.6 billion in 2023 to 2024. This was mainly due to 2023 to 2024 being the first full year of EPL alongside an increase in the EPL rate from 25% to 35% in January 2023. EPL was introduced on 26 May 2022
• lower energy prices in 2023 to 2024 and a decrease in oil and gas production were the main factors explaining the drop in overall receipts compared with 2022 to 2023

Chart 1 shows oil and gas tax revenues over the last 6 years (from financial year 2018 to 2019 up to and including 2023 to 2024). It shows overall net receipts and the constituent parts.

Key observations from chart 1 are:

• Petroleum Revenue Tax (PRT) receipts have been negative throughout the period. Since the PRT rate was cut to 0% in 2016, almost all PRT relates to repayments and appears as negative receipts. Repayments totalled £0.7 billion in 2018 to 2019, falling to £0.4 billion in 2019 to 2020 and again to £0.2 billion in 2020 to 2021 before an increase in 2021 to 2022 to £0.6 billion. They fell in 2022 to 2023 to £0.2 billion and increased in 2023 to 2024 to £0.4 billion
• offshore Corporation Tax (comprising Ring Fence Corporation Tax and Supplementary Charge) payments were £2.2 billion in 2018 to 2019, before dropping in 2019 to 2020 to £1.4 billion. Payments fell again in 2020 to 2021 to £0.7 billion because of the COVID-19 pandemic, before increasing to £2.1 billion in 2021 to 2022 as the effects of the pandemic were reversed. From 2022 to 2023, the chart also includes EPL payments
• energy prices remained high in 2022 to 2023, influenced by Russia’s invasion of Ukraine. This, alongside the introduction of EPL, meant that total offshore CT and EPL payments reached £9.3 billion in 2022 to 2023. Total payments then fell to £6.5 billion in 2023 to 2024 as global energy prices eased compared with the previous year
• net revenues across all oil and gas taxes (including PRT) were £1.2 billion in 2018 to 2019, before falling to £0.9 billion in 2019 to 2020 and £0.3 billion in 2020 to 2021. In 2021 to 2022, net revenues increased to £1.4 billion and in 2022 to 2023 increased sharply to £9.0 billion, in line with global energy prices, before falling by £2.9 billion to £6.2 billion in 2023 to 2024, as prices declined from their peaks in 2022

Chart 1: UK government oil and gas tax revenues

3. Publication information

Information about the publication is listed below:

• Theme: The economy
• Released: September 2024
• Frequency: Annual
• Next release: Autumn 2025
• Media Contact: HMRC Press Office 03000 585 158
• Statistical Contact: ct.statistics@hmrc.gov.uk
• Media Enquiries: HMRC Press Office 03000 585 158

hmrc.communications@hmrc.gov.uk

4. Key statistics

Corporation Tax receipts

Between financial years 2022 to 2023 and 2023 to 2024, net offshore Corporation Tax receipts (payments minus repayments), comprising Ring Fence Corporation Tax (RFCT) and Supplementary Charge (SC), decreased by £3.7 billion (55%).

Petroleum Revenue Tax receipts

PRT repayments were £0.4 billion in financial year 2023 to 2024, an increase of £0.2 billion (83%) compared with 2022 to 2023. Loss-making fields can carry their losses back to relieve profits and tax paid in previous years, subject to time limits and other rules.

From 1 January 2016, the PRT rate was reduced to 0%.

Energy Profits Levy receipts

EPL receipts were £3.6 billion in financial year 2023 to 2024, an increase of £1.0 billion (36%) compared with 2022 to 2023.

Historic revenues from UK oil and gas production

Government revenues from UK oil and gas production generally decreased over the last decade before a significant upturn in financial year 2022 to 2023 due to global events. From 2016, the rate of PRT was permanently set to 0% and SC was reduced to 10%. Together with the general maturing of the oil and gas fields in the UK Continental Shelf (UKCS), this resulted in reducing revenues.

In 2022 to 2023, high energy prices alongside the introduction of the EPL saw government revenues from oil and gas production increase to their highest levels since 2011 to 2012. Receipts decreased in 2023 to 2024 as energy prices eased off from their previous highs.

Chart 2 shows how net revenues have fluctuated since financial year 1987 to 1988

RFCT includes Advance Corporation Tax (ACT), charged between 1978 to 1979 and 1999 to 2000.

Key observations from Chart 2 are:

• UK government revenues from oil and gas production decreased significantly from a peak of £12.4 billion in financial year 2008 to 2009 to £0.3 billion in 2020 to 2021, with negative net revenues in some years within this period. The steady recovery of energy prices throughout 2021 and early 2022 reversed this trend
• despite some decline in prices since the second half of 2022, energy prices remained at elevated levels. This, together with the introduction of EPL, resulted in net North Sea receipts of £9 billion recorded in 2022 to 2023. Energy prices dropped in 2023 to 2024, resulting in lower receipts of £6.2 billion
• total net revenues fell below zero, with repayments exceeding payments, for the first time in 2015 to 2016 and again in 2016 to 2017. This was followed by a modest recovery in the next two financial years, before falling again in both 2019 to 2020 and 2020 to 2021. Revenues recovered in 2021 to 2022, further increasing in 2022 to 2023 before a drop in 2023 to 2024

Chart 2: Historic UK government tax revenues from oil and gas production

6. Exchequer liability from decommissioning

In July 2024, the North Sea Transition Authority’s central estimate was that total industry costs from 2024 onwards for decommissioning all UK upstream oil and gas infrastructure would be £43 billion in 2023 prices. We forecast £5.7 billion in tax repayments associated with this decommissioning, as seen in HMRC’s Annual Report and Accounts. There is also a forecasted cost of £5.1 billion in the form of forgone Offshore CT. Decommissioning expenditure reduces company profits and hence lowers the overall tax take. Combined, the total cost to the Exchequer from this expenditure is estimated to be £10.8 billion.

7. Definitions

How is Corporation Tax applied to oil and gas companies?

This is calculated in the same way as mainstream Corporation Tax applicable to all companies but with the addition of a ‘ring fence’. The ring fence prevents taxable profits from oil and gas extraction in the UK and UK Continental Shelf (UKCS) being reduced by losses from other activities or excessive interest payments. The current tax rate on ring fence profits is 30% and is set separately from the main rate of Corporation Tax (25%).

What is Supplementary Charge?

This is an additional charge on a company’s ring fence profits (but with no deduction for finance costs). With effect from 1 January 2016 the rate is 10%.

What is Petroleum Revenue Tax?

This is a field-based tax 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 PRT rate was reduced to 0% (it was previously 50%). PRT is a deductible expense in computing profits chargeable to ring fence corporation tax and supplementary charge.

What is Energy Profits Levy?

The Energy Profits Levy (EPL) was introduced on 26 May 2022 and is due to last until 31 March 2030. The initial tax rate was 25%. This was increased to 35% from 1 January 2023 and is due to increase further to 38% on 1 November 2024.

The tax base is similar to that of Ring Fence Corporation Tax but with some adjustments and restrictions. For example, finance and decommissioning costs cannot be included in the calculation of EPL; and companies are not allowed to use historical losses to reduce their EPL liabilities.

When it was introduced, the levy included an additional investment allowance of 80%, that can be claimed at the point of investment. From 1 January 2023, this allowance was reduced to 29%, except for investment expenditure on upstream decarbonisation which remained unchanged at 80%.

On 29 July 2024 the government announced further changes to EPL from 1 November 2024. Details of the current regime and announced changes can be found in this HM Treasury Policy Paper.