Taxes Consolidation Act 1997 section 696C

Charge to profit resource rent tax

Section 696C imposes an additional corporation tax charge, known as profit resource rent tax (PRRT), on petroleum field profits where the profit ratio reaches 1.5 or more, applying to petroleum leases entered into following exploration licences awarded after 1 January 2007.

• PRRT is an additional corporation tax on petroleum field profits already subject to the 25 per cent rate, introduced by the Finance Act 2008 to give effect to the Government decision of 30 July 2007, and applies to leases following exploration licences awarded after 1 January 2007.
• The profit ratio is the cumulative field profits (net of 25 per cent corporation tax) divided by the accumulated capital investment in the field; the PRRT rate is 5 per cent where the ratio is at least 1.5 but less than 3, 10 per cent where it is at least 3 but less than 4.5, and 15 per cent where it is 4.5 or more.
• In the first accounting period where the profit ratio reaches 1.5 (having been below 1.5 in the preceding period), a formula determines the taxable amount by reference to cumulative field profits and cumulative field expenditure, grossed up to a pre-tax equivalent.
• For all other accounting periods where the ratio is 1.5 or more, PRRT applies to the full taxable field profits for that period.