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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Corporation Tax Ring Fence: Oil Extraction as a Separate Trade


CTA10\S279 & ITTOIA05\S16 provide that certain extraction activities conducted as part of a trade are to be treated for all purposes of income and corporation tax as “a separate trade, distinct from all other activities carried on … as part of the trade”. The activities are

  • any oil extraction activities or
  • the acquisition, enjoyment or exploitation of oil rights or
  • activities of both descriptions.

Where one composite trade is formed partly of ring fence elements and partly of non-ring fence elements the ring fence and non-ring fence profits must be calculated separately.