Petroleum Royalties (Relief) Act 1983

In the Budget statement in 1983 the Chancellor of the Exchequer announced changes to the taxation in the oil industry. He noted that Government had a responsibility to compare the likely returns from future development both to the Government and to the industry, and had to ensure that the country obtained the appropriate benefit.[1]

The demarcation line between the direct benefit to the nation and the benefit to the oil and gas industry work was such that, after the Budget measures and taxation proposals and the measures in this Act the nation would obtain the majority of the benefit. Petroleum revenue tax was 75 per cent, and corporation tax was 52 per cent.[1] The measures in this Act meant that benefit from other discoveries and developments will benefit the nation as a whole. As a result of the application of royalties for future developments outside the southern basin of the North Sea, the marginal tax rate for a field paying petroleum revenue tax will be reduced from 89.5 to 88 per cent.[1]

Oil production increased and the Government's revenue from North Sea taxation in 1984/5 was £12 billion or 8 per cent of total tax revenue.[2]

In response to the oil price fall in 1986 the Government reduced taxation further by enacting the Advance Petroleum Revenue Tax Act 1986.[2]

The Petroleum Royalties (Relief) Act 1983 (1983 chapter 59) received Royal Assent on 21^st December 1983. Its long title is ‘An Act to confer on holders of petroleum production licences an exemption from royalties (including royalties in kind) in respect of petroleum from certain new fields off the coast of Great Britain.’[3]

Section 1 of the 1983 Act was extended by Petroleum Royalties (Relief) and Continental Shelf Act 1989 (c. 1)

Section 1 of the 1983 Act was amended by Petroleum Act 1998 (c. 17)

• Oil and gas industry in the United Kingdom
• North Sea Oil
• Petroleum Act