Profits from exploration and exploitation rights
Published 13 July 2026
© Crown copyright 2026
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/exploitation-rights/profits-from-exploration-and-exploitation-rights
Who is likely to be affected
Persons with profits in connection with exploration and exploitation rights held in relation to activities undertaken in the UK or on the UK continental shelf.
General description of the measure
The measure explicitly treats exploration and exploitation rights in relation to activities undertaken in the UK or on the UK continental shelf as immovable property.
Policy objective
The objective of this measure is to make sure that the UK’s Double Taxation Agreements operate in a clear, consistent and internationally aligned way in relation to profits arising from exploration and exploitation rights held by businesses and individuals.
Background to the measure
Currently, certain contractual rights may fall outside the intended scope of the UK’s taxing provisions due to their interaction with the UK’s tax treaties. The legislation is therefore being updated to address this interaction and make sure that the framework operates as intended.
Detailed proposal
Operative date
This measure will have effect in respect of profits arising on or after 1 April 2027 for Corporation Tax purposes, and from 6 April 2027 for Income Tax purposes.
Current law
The current rules relating to profits from the exploration or exploitation of natural resources are contained in Section 1313 Corporation Tax Act 2009 and Section 874 Income Tax (Trading and Other Income) Act 2005.
The current legislation governs the taxation of profits arising from the exploration and exploitation of the United Kingdom and the UK sector of the continental shelf for Corporation Tax and Income Tax purposes, but does not explicitly provide that certain rights connected with these activities, including but not limited to: overriding royalty interests, net profit interests, net cashflow sharing arrangements, are to be treated as immovable property.
Proposed revisions
The measure will be implemented through amendments to the provisions governing the treatment of profits in relation to exploration and exploitation rights held.
Primary legislation will provide that profits arising from certain rights connected with the exploration or exploitation of natural resources are to be treated as income from immovable property. The provision will apply where such rights derive their value from, or are used in connection with, land or natural resources.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| — | — | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will impact individuals with profits in connection with exploration and exploitation rights held in relation to activities undertaken in the UK or on the UK continental shelf, so that these rights will be treated as immovable property. It is expected that this measure will affect very few individuals, as these types of profits are primarily realised by businesses.
Customer experience is expected to remain the same following this update to existing legislation as it does not alter how individuals would interact with HMRC.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure may apply to individuals regardless of their protected characteristics. HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot assess if there are any disproportionate impacts to protected groups.
Administrative impact on business including civil society organisations
This measure will have a negligible administrative impact on businesses with profits in connection with exploration and exploitation rights held in relation to activities undertaken in the UK or on the UK continental shelf, these rights will be treated as immovable property. One-off costs will include familiarisation with these changes. There is not expected to be any continuing costs.
Customer experience is expected to remain the same following this update to existing legislation as it does not alter how businesses would interact with HMRC.
This measure is not expected to impact on civil society organisations.
Operational impact (£ million) (HMRC or other)
There are no HMRC operational impacts expected due to this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax payments and returns.
Further advice
If you have any questions about this change, contact Shaun Hughes by email: shaun.hughes1@hmrc.gov.uk.