Guidance: Petroleum Revenue Tax

Petroleum Revenue Tax is a tax on the profits from oil and gas production in the UK or on the UK continental shelf. The tax only applies to fields that were approved before 16 March 1993. These are known as ‘taxable fields’.

The tax was permanently zero-rated from 1 January 2016, this means the rate of Petroleum Revenue Tax has been 0% since that date. The tax was not abolished as some companies still need access to their tax history for carrying back trading losses and decommissioning costs.

From 1 January 2016, taxable oil fields can become non-taxable if the ‘responsible person’ (usually the field operator) elects to opt the field out of the Petroleum Revenue Tax regime.

All participators in a field must agree to it being opted out of the tax before the ‘responsible person’ can contact HMRC to request an election by emailing maggie.martin@hmrc.gov.uk or writing to:

Find out more about how to elect for an oil field to become non-taxable in OT19250 of the HMRC Oil Taxation Manual.

Working out Petroleum Revenue Tax

If you hold a production licence for a taxable field, you must work out the tax on your share of the income from the field, minus any allowable costs.

You can find out more about calculating Petroleum Revenue Tax in OT03150 of the HMRC Oil Taxation Manual.

When to submit a Petroleum Revenue Tax return

The ‘responsible person’ (usually the field operator) must submit a return showing the total amount of oil and gas produced from the field. The deadline is one month after the end of each chargeable period.

Each company with a licence for the field must then submit a separate return showing income from all their taxable fields. The deadline is 2 months after the end of each chargeable period.

Most companies that submit returns use their own software to file electronically. However, you can download Petroleum Revenue Tax forms and complete and submit them to HMRC.