Policy paper

Review of the Oil and Gas Fiscal Regime: Terms of Reference

Published 9 June 2023

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Context

In the 2022 Autumn Statement, the Chancellor announced a review into the long-term fiscal regime for oil and gas to ensure the regime delivers predictability and certainty, supporting investment, jobs and the country’s energy security.

Terms of Reference

This review will consider whether and how the fiscal regime can incentivise investment in the UK Continental Shelf consistent with our energy security and net zero ambitions by:

  • supporting UK energy security and helping to meet domestic energy demand, as we transition to net zero, through incentivising activity that maximises economic recovery of the UK’s oil and gas resources in the medium term
  • promoting the pathway to a net-zero basin by 2050 through supporting the decarbonisation of upstream oil and gas activities, as set out in the North Sea Transition Deal
  • prioritising long-term energy security, and responding to the diversification of activity in the basin in a way that minimises barriers to investment in greener technologies
  • being made more efficient and predictable, including in its response to any future price shocks and persistent price volatility as well as through further simplification
  • delivering a fair return on the nation’s resources to support the public finances and fund vital services

Scope

The review will look at the future of the fiscal regime that currently applies to ring-fence activity in its totality, including Petroleum Revenue Tax, Ring Fence Corporation Tax, Supplementary Charge, and the different tax reliefs and allowances available within the regime. The review will consider how the regime can support broader government objectives as they apply to oil and gas activities, including the Government’s Energy Security and Net Zero Growth Plans, but any outcomes will relate wholly to fiscal policy.

Roles and Responsibilities

The review will be led by HM Treasury, working closely with HM Revenue & Customs, the Department for Energy Security & Net Zero and the North Sea Transition Authority. HM Treasury has committed to engaging with the oil and gas industry and other interested stakeholders as part of the review’s process. This engagement will begin shortly.

Timing

The review will report by the end of the year.

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