Employment Tax

Offshore oil and gas workers

Produced by Tolley
  • 19 Oct 2021 23:24

The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Offshore oil and gas workers
  • Income tax on earnings
  • Transport to and from offshore installations
  • National Insurance on earnings
  • Who should operate PAYE?
  • Divers and diving supervisors

Offshore oil and gas workers

Income tax on earnings

An employee’s tax position can sometimes depend on whether he carries out his duties in the UK or elsewhere. This is the case if the employee is non-resident in the UK, or not domiciled in the UK with the remittance basis applying (see the Taxation of cash earnings guidance note for more details).

As offshore oil and gas installations in waters around the UK are outside the UK’s territorial waters, duties carried out on board those installations are, as a matter of fact, carried out outside the UK. However, for income tax purposes the worker is treated as carrying out his duties in the UK if:

  1. the worker’s duties are carried out on connection with the exploration or exploitation of natural resources on or under the seabed

  2. he works in the UK sector of the Continental Shelf

ITEPA 2003, s 41

For more information on the geographical limits of the UK sector of the Continental Shelf see EIM67120.

Transport to and from offshore installations

Normally, if the employer meets the cost of travel between home and the workplace, this is taxable as a benefit. However, there is a specific exemption for travel for oil and gas workers for that part of their journey which is between the mainland and the offshore installation. More precisely, the exemption applies to travel between the mainland port or airport which the employer normally uses as the departure, or arrival point for transfer between the offshore installation, and the location of the installation itself.

The exemption also covers any local travel, accommodation and subsistence provided by the employer for employees who have to wait at or near the mainland port or airport before or after the transfer because of a gap before the next leg of their journey.

There is no liability to income tax or NICs on the transport, travel, accommodation or subsistence covered by the exemption.

National Insurance on earnings

Workers on offshore oil and gas installations in the

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