HMRC's published guidance on Petroleum Revenue Tax — the 0% PRT rate since January 2016, the ring-fence corporation tax framework, the Energy Profits Levy history and current 38% rate, and the planned Oil and Gas Price Mechanism successor from 2030.
All figures sourced from HMRC's published guidance, Finance Acts and OBR receipts data. This framework applies to companies producing oil and gas in the UK and on the UK Continental Shelf (UKCS).
Per HMRC's published Oil Taxation Manual (OT) on GOV.UK, Petroleum Revenue Tax is a field-based tax charged on profits arising from individual oil and gas fields that were approved for development before 16 March 1993. PRT was introduced by the Oil Taxation Act 1975 and operated as a significant revenue-raising charge on North Sea profits for several decades.
HMRC's full technical guidance on PRT and the ring-fence regime is in the Oil Taxation Manual (OT) on GOV.UK. The Energy Profits Levy is covered in HMRC's EPL guidance on GOV.UK and the Oil and Gas Profits Levy Manual.
| Item | Detail |
|---|---|
| PRT rate from 1 January 2016 | 0% — permanently reduced; not abolished |
| Fields in scope of PRT | Only fields approved for development before 16 March 1993 |
| Fields never subject to PRT | Fields approved on or after 16 March 1993 — never liable |
| Why PRT was not abolished | Per HMRC's guidance: losses from PRT-liable fields can still be carried back against historical PRT payments made when the rate was positive — preserving valuable decommissioning relief for pre-1993 fields |
| PRT and corporation tax interaction | PRT was a deductible expense for RFCT and SC purposes. At 0%, this deductibility has no practical effect on current liabilities |
Source: GOV.UK — Oil Taxation Manual & House of Commons Library: Taxation of North Sea oil and gas
Per HMRC's guidance, even though the PRT rate is 0%, decommissioning losses from pre-1993 fields can be carried back against historical PRT payments made when the tax was charged at positive rates. This can generate PRT repayments for companies decommissioning legacy North Sea assets. HMRC statistics confirm PRT repayments of £0.4 billion in financial year 2023/24, reflecting this ongoing loss carry-back activity.
Per HMRC's published guidance, the ring-fence regime applies to profits arising from oil and gas extraction in the UK and on the UKCS. The ring-fence prevents profits from these activities being reduced by losses from other activities outside the ring-fence — ensuring oil and gas extraction profits are taxed at the full ring-fence rates.
| Tax | Rate | Basis |
|---|---|---|
| Ring Fence Corporation Tax (RFCT) | 30% | Applied to ring-fenced profits on the same basis as onshore corporation tax, but with 100% first-year allowances for virtually all capital expenditure |
| Supplementary Charge (SC) | 10% | Additional charge on ring-fenced profits, reduced from 20% in the 2016 Budget alongside the PRT reduction to 0% |
| Combined RFCT + SC baseline | 40% | This 40% rate has applied since January 2016 |
| Energy Profits Levy (EPL) | 38% | Additional charge from 1 November 2024 — see EPL section below |
| Combined headline rate (with EPL) | 78% | RFCT 30% + SC 10% + EPL 38% |
| Petroleum Revenue Tax (PRT) | 0% | Applies to pre-1993 fields only; effectively nil contribution to current liabilities |
Per HMRC's published EPL guidance on GOV.UK, the Energy Profits Levy is an additional surcharge on profits from oil and gas production in the UK and on the UKCS, introduced in May 2022 in response to extraordinary profits arising from elevated energy prices following Russia's invasion of Ukraine.
Per HMRC's published guidance and the Finance Act 2026, the EPL rate is 38% on ring-fenced profits from 1 November 2024. The EPL is legislated to run until 31 March 2030, subject to the Energy Security Investment Mechanism (ESIM). The ESIM can end the EPL earlier if both the six-month average oil price falls to or below $71.40 per barrel and the average gas price to or below £0.54 per therm.
| Period | EPL rate | Combined headline | Notes |
|---|---|---|---|
| 26 May 2022 – 31 Dec 2022 | 25% | 65% | Introduced — Energy (Oil and Gas) Profits Levy Act 2022 |
| 1 Jan 2023 – 31 Oct 2024 | 35% | 75% | Autumn Statement 2022 increase; extended to March 2028 |
| 1 Nov 2024 onwards | 38% | 78% | Autumn Budget 2024; extended to 31 March 2030; investment allowances removed |
| 2025/26 (current) | 38% | 78% | Finance Act 2026, sections 15–17 |
| 2026/27 (current) | 38% | 78% | Legislated to 31 March 2030 or earlier ESIM trigger |
Source: GOV.UK — EPL guidance & Finance Act 2026 (sections 15–17). Note: the investment allowance (previously 29%) was removed from 1 November 2024.
Per HMRC's published guidance, the main EPL investment allowance of 29% (which had provided an uplift on qualifying expenditure against the levy) was removed from 1 November 2024 alongside the rate increase to 38%. This significantly changes the effective tax cost of capital expenditure in the North Sea for periods after that date. The Energy Security Investment Mechanism (ESIM) remains in place as the early-termination mechanism.
Per the Autumn Budget 2025 announcement and HMRC's published guidance, the Energy Profits Levy will be replaced from 1 April 2030 by a permanent charge called the Oil and Gas Price Mechanism (OGPM). Unlike the EPL — which applies to all ring-fenced profits — the OGPM will be a revenue-based charge that applies only when oil and gas prices are above specified threshold prices.
The OGPM is a planned future change, not yet enacted as at May 2026. Per HMRC's published Autumn Budget 2025 summary, the OGPM will: charge 35% on revenues above set price thresholds; use a threshold of $90 per barrel for oil and 90p per therm for gas for financial year 2026/27; apply in addition to RFCT and the Supplementary Charge (combined 40%); and apply only during high-price periods. Full legislation is expected in Finance Bill 2026-27. HMRC has indicated it will engage with the sector on draft legislation before enactment.
| Tax / charge | 2022/23 | 2023/24 | 2024/25 | 2025/26 | 2026/27 |
|---|---|---|---|---|---|
| PRT rate | 0% | 0% | 0% | 0% | 0% |
| Ring Fence Corp Tax (RFCT) | 30% | 30% | 30% | 30% | 30% |
| Supplementary Charge (SC) | 10% | 10% | 10% | 10% | 10% |
| EPL rate (where applicable) | 25–35% | 35% | 35% / 38%* | 38% | 38% |
| Combined headline (with EPL) | 65–75% | 75% | 75% / 78%* | 78% | 78% |
*2024/25: EPL was 35% for profits arising before 1 November 2024 and 38% for profits arising on or after that date. Source: GOV.UK — EPL guidance & Finance Act 2026. Rates shown are for ring-fenced profits from UK and UKCS oil and gas production.
This page is an informational summary of HMRC's published guidance — not personalised tax guidance. The ring-fence regime, EPL and PRT involve specialist technical rules. Our free matching service connects you with verified UK tax professionals experienced in oil and gas taxation.
Answers based on HMRC's published guidance with direct GOV.UK links. Informational guide only — not personalised tax guidance.
This page is an informational summary of HMRC's published rules — not personalised tax guidance. Our free service connects you with verified UK tax professionals specialising in oil and gas taxation.
Important — informational guide only, not tax or legal guidance. UK Tax Hero summarises HMRC's published guidance as a free information and expert-matching service. Nothing on this page constitutes personalised tax guidance, legal guidance or a recommendation to take any action. Figures shown are based on HMRC's published guidance and Finance Acts for 2022/23 to 2026/27. The OGPM information reflects Autumn Budget 2025 announcements and is subject to final legislation. Always verify on GOV.UK and consult a qualified professional before acting. UK Tax Hero is not regulated by HMRC, the FCA or any professional body.
