Taxes in Europe Database v2
Oil Taxation Act 1975, Petroleum Revenue Tax Act 1980 and Oil Taxation Act 1983, as amended by annual finance acts.
Assessments are made on the difference between incomings (known in the legislation as "positive amounts") and expenditure (known as "negative amounts") for a field.
Incomings include three main items: the gross profits arising from disposals of oil and gas produced by each participator in each chargeable period, tariff receipts and disposal receipts.
In addition to relief for field‑related expenditure, various other reliefs and allowances are often available. Some of these are described below.
The participator's share of the assessable profit or allowable loss for the field in each chargeable period, each chargeable period being a period of six months ending on 30 June or 31 December each year. PRT is a field‑based tax and each field is assessed in isolation although certain "cross‑field" allowances are available.
Gas sold under a pre June 1975 contract with a former monopoly supplier is exempt from PRT. There are various other reliefs - see “special features” below.
The PRT rate was changed form 50% to 35% effective for chargeable periods ending after December 2015.
Thirty days after the issue of a tax assessment subject to earlier instalment and advance payments.
By assessment and a system of instalments and advance payments.
If the chargeable period is one in which safeguard relief applies then, after PRT has been calculated in the normal way - taking account of all allowances and reliefs - a safeguard calculation is made.
"Safeguard" limits the PRT charge in each chargeable period to not more than 80 % of the amount (if any) by which field profit exceeds 15 % of the cumulative capital expenditure at the end of that period. "Safeguard" applies up to break‑even point and for half as many periods again.
The following are the main reliefs available to set against participators' profits in a taxable field:
"Uplift" - because interest and loan costs are not allowable for PRT, these costs are reflected in a relief known as "uplift" or "supplement", which is an addition of 35 % to, broadly, certain capital expenditure. In order to qualify for supplement the expenditure must have been incurred for specific purposes, including bringing a field on‑stream or substantially improving the rate of production or transportation.
"Oil allowance" provides PRT exemption to each participator for a certain amount of oil from each field in a chargeable period. The allowance per period is 125,000, 250,000 or 500,000 metric tonnes depending on the location of the field and the date on which it was given development consent. There is a cumulative limit over the life of the field of 20 times the allowance per period.
Subject to various restrictions, relief can also be given for certain exploration and appraisal expenditure, unrelieved field losses, limited oilfield development and general research expenditure incurred in different fields.