Working as an offshore contractor in the oil and gas industry can be extremely lucrative – provided you understand your tax opportunities as well as potential labilities. As long-term oil and gas industry accountants, here are some of the things it’s most important to keep in mind in the industry in 2026.
Know Exactly Where You Work
For most purposes, including taxation, UK waters are defined as our territorial waters out to 12 nautical miles from the nearest coast, and a few other designated areas. If you find work on a rig outside these waters, perhaps in another nation’s agreed oil exploration areas, you will be paying tax elsewhere, under different regulations.
As such, from the moment you receive a job offer it can be important to know which waters you’ll be working in.
Double Check Double Taxation
A number of offshore oil workers we’ve spoken to have been surprised at least once in their career to discover that they’re working in a country that doesn’t have a Double Taxation Agreement (DTA) with the UK.
Despite the name, DTAs are actually a good thing; they’re designed to prevent situations where a worker is ‘double taxed’, having tax obligations to two different nations at once, while still ensuring that both governments are happy with the tax situation. As you can imagine, this is a fine line to walk!
The UK has more than 100 different DTAs with other nations. These include the Netherlands, Germany, Denmark, and Norway – all major nations in the North Sea oil and gas industry.
Understand Your Tax Implications
As well as working in UK waters or in a nation with a DTA, the factors that can affect your tax obligations (and your available tax opportunities) as well as National Insurance contributions include:
- Do you work for a UK company?
- Are you a UK national or a foreign national?
- Are you paid through your own limited company and, if so, where is it registered?
Overseas contracts are likely to trigger foreign tax reporting requirements. Operating through a UK limited company will raise considerations of corporation tax and dividends.
Consider IR35 Compliance
As always, whether or not you’re in compliance with IR35 is a huge factor in the end value of what you’re paid. For offshore workers, you’ll be working in a specific location, which is part of the test of control that’s part of the IR35 status tests. This makes it even more important that you look at the rest of these tests to ensure you have a correct determination.
As always, there are many other factors that can significantly affect the profitability of a given contract for offshore oil workers, but the above summary covers the most common questions. If you believe you may be affected by another factor and want an expert opinion, or if you simply want to understand exactly what the tax implications of a given role are in the 2026/27 tax year, please get in touch to arrange a discussion.
