Oil & Gas UK Economic Report 2015

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ECONOMIC REPORT 2015 35
6.2 Fiscal Contribution
Since 1970, direct taxes from the production of oil and
gas have totalled more than £330 billion to end 2014.
Tax rates have ranged widely over the years and have
not always reflected the UKCS’ profitability. They have,
however, begun to fall since the last increase in 2011
(as detailed in Section 7.5 under promoting investment).
UKCS production tax receipts have fallen sharply
since reaching £14 billion in 2008-09 in 2014 money,
reflecting the decline in production, increased costs of
operating the basin and also the ability to immediately
offset capital allowances in full against taxable profits
(see Figure 19). The latest HM Treasury projections
indicate tax receipts of £2.2 billion in the fiscal year
2014-15, which is expected to decline further to
just £0.5 billion by 20216, based on current forward
oil prices.
Oil & Gas UK has estimated tax receipts paid by the
UK supply chain from two main sources: corporation
tax and value added tax (VAT) plus payroll (PAYE and
employer’s national insurance contributions). Based
on the latest figures available7, the supply chain’s
corporation tax contributions in 2013 are estimated at
over £1 billion and payroll contributions are estimated
at over £1.5 billion, totalling circa £2.5 billion.
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1968/691970/711972/731974/751976/771978/791980/811982/831984/851986/871988/891990/911992/931994/951996/971998/992000/012002/032004/052006/072008/092010/112012/132014/152016/172018/192020/21
Government Revenues from UK Oil and Gas Production
(£ Billion - 2014 Money)
Royalty
Supplementary Charge
Ring Fence Corporation Tax
Advanced Corporation Tax
Supplementary Petroleum Duty
Petroleum Revenue Tax
Summer
Budget
2015
Forecast
(nominal)
Source: HM Treasury, Office for Budget Responsibility
Figure 19: Production Tax Revenues and HM Treasury Forecast
6 See the summer Budget 2015, p.108, at
7 The projections are based on Oil & Gas UK’s interpretation of data provided in The UK Upstream Oil and Gas Supply Chain – Economic Contribution
(April 2014), published by EY at
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