UK EITI Workplan 2021 covering planned activities by the UK EITI MSG in 2021.
UK oil and gas tax regime
As the UK’s oil and gas industry has developed over the last 40 years, successive governments have developed a tax regime designed to ensure that the nation receives a fair share of the profits from the exploitation of its oil and gas resources.
At the same time, the regime aims to support maximising the economic recovery of the UK’s remaining hydrocarbon resources. The fiscal regime which currently applies to oil and gas extractive activities comprised three separate taxes: Petroleum Revenue Tax (PRT), Ring Fence Corporation Tax (RFCT) and the Supplementary Charge (SC).
HMRC produce an Oil Taxation Manual which provides an overview of the law and practice for the oil fiscal regime, in particular for Petroleum Revenue Tax, Ring Fence Corporation Tax and the Supplementary Charge.
Read more details on the UK oil and gas tax and legal regime.
UK Mining and Quarrying Tax Regime
Mining and quarrying companies pay corporation tax (CT) on their profits at the standard rate, unlike profits from oil and gas extraction, which are subject to Ring Fence CT regime. Profits from upstream and downstream activities are not separated, and such companies pay a single amount of CT on the profits arising from all their activities. It is therefore not possible to say how much of the taxes paid by the companies whose tax payments are reported here related to their extractive activities nor what the total of such taxes was (and therefore what proportion of the total is covered by this report).
Companies based in the UK have to pay CT on all their taxable profits, wherever in the world those profits originate, although double taxation relief is available where appropriate to avoid the same profits being taxed twice. Companies not based in the UK, but with branches operating in the UK, have to pay CT on taxable profits arising from their UK activities. CT payments by mining and quarrying companies are included in the scope of the UK EITI. The figures reported are for total CT and include tax on both upstream and downstream activities. Corporation tax is paid by a small number of larger companies whose activities are primarily downstream.
Capital allowances are a feature of business taxation in the UK and apply to the mainstream CT regime (as well as to income tax). For CT purposes, the general rule is that capital expenditure is not allowed as a deduction for tax purposes. This means that profits chargeable to CT cannot be reduced by depreciation or similar expenses. The capital allowance regime exists to provide some relief for capital expenditure incurred. The main allowance which is commonly relevant for companies carrying on mining and quarrying activities is Mineral Extraction Allowance (MEA).
Research and Development Expenditure Credit (RDEC) is a tax credit available to companies operating in all sectors. It is generated by spend on research and development, and is claimed as a tax credit. There are a number of ways in which a company can receive payment of their RDEC claim, including offsetting against another of its tax liabilities and receiving a cash repayment. More information on RDEC can be found in the HMRC guidance and statistics on RDEC . For EITI reporting purposes, tax payments/repayments are reported exclusive of any adjustment for RDEC.
There are several other payment streams, such as the Aggregates Levy, which involve payments from extractive companies to the Exchequer. These are outside the scope of EITI as they are indirect taxes not direct taxes. They are documented by ONS in its annual publications on environmental accounts and environmental taxes.
Read more detailed information on the UK mining and quarrying tax and legal regime.
The UK public registry of ultimate beneficial owners of UK companies is called the People with Significant Control register. It was established in June 2016 under the UK Small Business, Enterprise and Employment Act 2015 and is part of the Companies House Register. Read more about the UK's beneficial ownership work on the beneficial ownership page of the UK EITI website. There is also guidance for companies and the outcome of a recent consultation of companies available for more information.
The United Kingdom oil and gas industry is in its sixth decade of offshore production. Between 2014 and 2017, production on the UK Continental Shelf increased by over 15% - a significant achievement given the basin had previously seen a consistent decline since 2000. The increased production level derived from both improved performance of existing oil and gas fields and the addition of capacity from new field start-ups. In 2017 the UK mining and quarrying industry produced 176 tonnes of primary aggregates. Mining in some parts of the UK is undergoing an upturn with new projects and mines being developed in the North West and North East of England and in Scotland.
The United Kingdom has rich deposits of crude oil, natural gas, coal, tungsten, tin as well as a range of industrial and construction materials. Abundant oil and gas reserves are found offshore, while coal deposits are largely centred in Scotland, England and South Wales.
|Oil||4,339||million tons||Mostly offshore. Proven and probable reserves, not possible resources.|
|Gas||2,893||billion Sm3||Mostly offshore. Proven and probably reserves, not possible resources.|
|Coal||4,000||million metric tons||Potential resources. The UK has around 166 million tons of coal reserves operating mines and those in planning stages. There are another 167 million tons of coal in projects at pre-planning stage.|
|Tungsten||318,000||metric tons||England hosts the world's four largest known tungsten deposit, the Drakelands mine near Plympton, Devon.|
|Tin||32,700||metric tons||Located at the Drakelands Mine near Plympton, Devon.|
|Kaolin||N/A||UK deposits of kaolin are concentrated in Cornwall and Devon and world-class in terms of size and quality.|
|Ball clay||N/A||Deposits are centred in Devon and Dorset, mainly used for the manufacture of white ware ceramics|
|Potash||N/A||Yorkshire has one of the largest proven world deposits of potassium-rich minerals.|
|Salt||N/A||England accounts for 95% of UK salt production, 80% of which takes place in Cheshire; the Boulby potash mine in Yorkshire is another large centre|
|Flourspar||N/A||Production is centred at the Southern Pennine ore field in the Peak District National Park.|
Production on the UKCS is currently split roughly 60:40 between oil production and natural gas production.
Combined oil and gas production volumes from the UKCS peaked in 1999 at 4.5 million barrel of oil equivalent (boe) a day and declined to 1.4 million boe/day by 2014 – a consequence of natural reservoir decline in existing fields combined with fewer/smaller developments. Between 2014 and 2019, however, this trend was reversed and production on the UKCS increased by 19% to 1.7 million boe/day.
Source: OGA based on BEIS data
The UK is still a significant oil and gas producer, being responsible for 1.1% of global output of oil and gas in 2019, when the UK was the 21st largest producer of oil and gas (19th largest of both oil and gas).
Read more about UK oil and gas production.
Although the UK has significant domestic supply of some minerals, it is a net importer of many minerals and mineral-based products, particularly metals, and in the long term has experienced a balance of trade deficit.
UK mineral exports and imports have both increased in recent years. However, imports and exports of the largest minerals flow, aggregates, are relatively low, accounting for less than 5% of the market.
The Office for National Statistics (ONS) publish data on the volume of production and trade of metal ores and non-metallic minerals in its material flows account for the UK while they also report on the value of imports and exports. These data have yet to be verified so they are not included here to avoid giving a misleading impression of the scale of the sector.
The British Geological Survey (BGS) produce a periodic United Kingdom Minerals handbook which includes statistical data on the production of UK mineral resources including construction, industrial and metal minerals.
Read more about the UK mining and quarrying sector.
Payments and refunds reported by extractive companies and government agencies in 2019, totalled net £1,513.69 million. Most of these transactions cover Ring-Fence Corporation Tax and Supplementary Charge payments to HMRC and licence fee payments to the OGA.
A total of £10.55m was reported by out-of-scope and non-participating companies and this is subtracted from the overall total, leaving a total of £1,503.14m reported by government and a total of £1,503.13m reported by UK in-scope companies. The final reconciliation shows an unreconciled difference of £0.01m, which works out at 0.001% of the total, highlighting the transparency of the UK sector.
The government agencies that reported payments and refunds in 2019 were HMRC, The Oil and Gas Authority, The Crown Estate and Crown Estate Scotland. A total of 54 in-scope companies participated in the 2019 process – 37 oil and gas companies and 17 mining and quarrying companies. This represents 99.30% of potential in-scope payments.
Full details of UK Government income and expenditure (outturn figures, estimates and forecasts) are published by the Office for Budget Responsibility (OBR). Government accounts are audited by the National Audit Office (NAO) and scrutinised by the Public Accounts Committee.
With very few exceptions, central government receipts are not hypothecated to specific items or types of expenditure. The principal central government extractive revenues currently earmarked for specific UK programmes or geographic regions involve the allocation of a population-based share of income from seaward petroleum licences to the Northern Ireland Government, as required by section 2 of the Miscellaneous Financial Provisions Act 1968. The amount transferred in 2019/20 was £2.0m (£1.7m in 2018/19).
All revenue ‘profit’ from Crown Estate Scotland goes to the Scottish Consolidated Fund and it is the responsibility of Scottish Ministers to decide how this is used. Crown Estate Scotland ensures that the assets are developed and enjoyed to deliver long-term value for communities and for the nation.
Onshore petroleum licensing is now devolved in Great Britain as well as to Northern Ireland, although the Oil and Gas Authority (OGA) continues to collect licence fees due on licences in Scotland and Wales as an agent for the respective administrations. Any amounts received in 2019 have been reported as received by the OGA; in practice, fees for licences in Scotland and Wales were waived.
In addition, the OGA Levy part-funds the operation of the OGA. The rates of the Levy are set by statutory instrument so have to be approved by Parliament. Any excess of income over expenditure is repaid to levy-payers which can result in net refunds for some levy-payers in a calendar year. The OGA is a vested company with operational independence from government. However, the Secretary of State (SoS) for Business, Energy and Industrial Strategy (BEIS) is the company’s sole shareholder and is ultimately responsible to Parliament for the OGA; the OGA Board of Directors is accountable to the SoS. The Permanent Secretary of BEIS is the Principal Accounting Officer for the OGA and is responsible to Parliament for any grant funding of the OGA; the OGA’s Chief Executive is responsible to the Permanent Secretary. The OGA’s Annual Report and Accounts are approved by the Board of Directors and the SoS.
The EITI encourages multi-stakeholder groups to explore innovative approaches to make the EITI more relevant and useful.
One of the United Kingdom’s objectives for EITI implementation is to support moves towards common global reporting standards in oil, gas and mining.
The United Kingdom has developed a publicly available Beneficial Ownership register with information on who owns and controls companies.
The 2020 EITI Annual Report provides five-year oil and gas production, budget and trade balance forecasts.
Disaggregated employment figures by region and gender are provided for mining and quarrying.
The EITI's Champion in the UK is Lord Callanan, Minister for Climate Change and Corporate Responsibility. The multistakeholder group is chaired by Matthew Ray, Department for Business, Energy & Industrial Strategy (BEIS). Read more about the composition of the multistakeholder group. The meeting minutes are also publicly available.
The UK government has taken a strong leadership role on the global tax transparency debate. The EITI was set up under its leadership back in 2002. The UK then supported the EU country-by-country reporting, committed to implement the EITI in 2013, placed tax and transparency at the centre of the G8 summit in 2013, and set up a beneficial ownership register in June 2016. In April 2018, the UK Parliamentary voted to require its overseas territories, including the British Virgin Islands and the Cayman Islands, to establish public beneficial ownership registers.
At a joint press conference with President of France François Hollande on 22 May 2013, Prime Minister David Cameron announced that the United Kingdom would implement the EITI. The commitment was reaffirmed at the 6th EITI Global Conference in Sydney in May 2013 and in the United Kingdom’s second OGP National Action Plan published at the 2013 OGP London Summit. The first EITI launch event took place on 9 July 2013 and the nominations to the multi-stakeholder group (MSG), composed of four members from each stakeholder group, were finalised in September 2013. The United Kingdom submitted its EITI Candidature application on 5 August 2014, approved by the EITI Board on 15 October 2014.
The UK EITI Payments Report details the payments made in 2020 by 39 oil and gas companies and 16 mining and quarrying companies operating in the UK as well as repayments by the government for the seventh year running.
The UK EITI Annual Review 2020 provides an overview of the UK’s progress in implementing the EITI Standard and features data on the payments between extractive companies and UK government bodies and agencies in calendar year 2019.
In accordance with Requirement 7.4 of the EITI Standard, this document is a review by the MSG of the impact of the first five years of EITI implementation in the UK. It explores the opportunities to further leverage the EITI platform to enrich public debate on the governance and stewardship of the UK's oil, gas and mineral resources.
Terms of Reference that defines the scope and function of the Multi-Stakeholder Group (MSG) formed to direct implementation of the Extractive Industries Transparency Initiative (EITI) in the UK.
UK EITI Workplan 2020 covering planned activities by the UK EITI MSG in 2020.
UK EITI Mainstreaming Feasibility Study explores the extent to which the EITI Standard can be achieved through the systematic or ‘mainstreamed’ disclosure of data by companies and public authorities.
This report sets out key summary information on the extractive industries in the UK. The website provides a deeper overview of these industries, including a comprehensive overview of the extractive industries in the UK, and dedicated pages on the upstream oil and gas sector, and the mining and quarrying sectors in the UK.
Following the summary information this report goes on to set out data on extractives-related payments received and made by the UK Government in 2018. This is the result of a data gathering and reconciliation exercise overseen by the multi-stakeholder group.
The Board agreed that the United Kingdom has made meaningful progress in implementing the 2016 EITI Standard. See Decision 2019-62/BC-281
Timeline of Validation and related materials
1 July 2018: Validation commenced19-26 September 2018: Country visit
Initial data collection and stakeholder consultations
30 April 2019 - Report on Initial data collection and stakeholder consultation [English
United Kingdom's EITI beneficial ownership roadmap outlines how the country intends to disclose the beneficial owners of the companies operating in the extractives sector in line with Requirement 2.5 of the EITI Standard.