CW Energy LLP
2 Contributions by CW Energy LLP Experts
PRACTICE NOTES
This Practice Note explains the petroleum revenue tax (PRT) framework. Historically, oil companies were liable to PRT on the value of oil and gas extracted and on receipts for using qualifying infrastructure, after deducting specified costs and reliefs. PRT was charged at varying rates following its introduction in 1975. It stood at 50% from July 1993, then was reduced to 0% with effect from 1 January 2016. Despite the nil rate, losses can still be generated and carried back to recover PRT previously paid. For guidance on the corporation tax, supplementary charge and energy profits levy rules applying to companies in the oil and gas sector, see Practice Note: Oil and gas—corporation tax, supplementary charge and energy profits levy.
PRT post 1 January 2016
Under a 0% regime, losses computed under the PRT rules, whether arising on
Tax
PRACTICE NOTES
FORTHCOMING CHANGES :
At Budget 2025, the government confirmed that, when the energy profits levy ends, it will be succeeded by a permanent regime known as the oil and gas profits mechanism (OGPM). The principal elements of the OGPM will be as follows:
it will constitute a turnover-based tax applying to upstream oil and gas companies operating in the UK or on the UK continental shelf
a company will be within scope where it disposes of oil or gas and the consideration received (ie the realised sale price) for that disposal exceeds the relevant threshold. For the financial year 2026–27, the thresholds will be US$90 per barrel for oil and 90p per therm for gas. In subsequent years, those thresholds will be adjusted by reference to the preceding year’s CPI
the OGPM tax rate will be 35%
The government has stated it will continue to work with the sector to
Tax
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