UK oil and gas Decommissioning Relief Deed (UKCS): framework, eligibility, Reference Amounts, Difference Payments, claims, applications and recent developments

Published by a LexisNexis Energy expert

Practice notes

The Decommissioning Relief Deed (DRD) constitutes a contractual arrangement between the UK government and a 'Qualifying Company' involved in oil and gas exploration and production on the UK Continental Shelf (UKCS), or associated with such a company. It is designed to give clear assurance about the tax relief a Qualifying Company will secure when offshore oil and gas decommissioning is carried out and, in defined circumstances, can also trigger a payment from the UK government to that company. The DRD is issued in a prescribed form by the UK government and cannot be altered in any respect. Its terms are set by that publication, and the deed is not negotiable. For more information on decommissioning in the oil and gas sector, see the following Practice Notes:

Decommissioning—legislative background
Decommissioning—International Law and UK Government Policy
Decommissioning—planning for decommissioning

Why is a DRD required in relation to UKCS assets?

The oil and gas-specific tax regime has been altered frequently, affecting both how taxation is structured (its basis) and the applicable rates. Currently, the sector pays special corporation tax rates on profits from exploration and production activities, namely ring fence corporation tax (RFCT) at 30%, a supplementary charge (SC) at 10%, and the Energy...

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Web page updated on 21/05/2026

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