GERS EXPLORER 2019-20

Income Tax

There were estimated to be 4.5 million adults in Scotland in 2018-19.

• Over 40% of Scottish adults - around 1.9 million individuals - pay no income tax. The large majority of taxpayers - around 2.2 million adults - only pay the basic rate of income tax.
• Less than 10% of Scottish adults, or around 360,000 individuals, are subject to the higher 40p rate.
• Less than 0.5% of Scottish adults, or around 20,000 individuals, are Additional Rate taxpayers.

UK figures for income tax revenue (both net and gross of tax credits) are taken from ONS’ database underlying the Public Sector Finances.

HMRC’s Survey of Personal Incomes (SPI) is used to estimate Scotland’s share of total UK income tax (gross of tax credits). This survey is carried out annually, sampling from HMRC’s PAYE, Self-Assessment and Claims Databases, and covers the income assessable for tax in each tax year. It covers 1.8% of income tax payers with a sample of approximately 600,000 people in the UK.

The latest SPI survey was published in March 2016 and provided data for 2013-14.

The SPI is used to estimate Scottish income tax liabilities (gross of tax credits) as a proportion of UK total income tax liabilities.

This share is then applied to the total UK income tax figure provided in ONS’ database.

The resulting figure is used as an estimate of gross income tax revenues raised in Scotland.

Corporation Tax

Corporation tax is a tax on a company's taxable income or profits. Different rates apply depending upon the amount of profit raised. There are a number of special accounting rules for particular expenditures, such as capital investment and research and development, which qualify for tax allowances and reliefs

There are different rates and rules governing corporation tax of North Sea output. These are discussed in more detail later in here.

GERS apportions a share of UK corporation tax revenues based on the economic activity undertaken in Scotland and not the location of companies’ headquarters.

Public corporations’ and North Sea corporation tax revenues are excluded from the analysis and are apportioned to Scotland separately.

Calculating Scottish corporation tax revenues is a three stage process. Firstly the UK figure for total corporation tax is taken from ONS’ database underlying the Public Sector Finances. An adjustment is then made to remove corporation tax payments from the North Sea sector. Although the ONS database has accurate up to date figures on total corporation tax, it does not contain North Sea corporation tax payments, and so data are obtained from HMRC’s published tables on corporation tax.

The Scottish share of UK corporation tax (excluding North Sea) is taken from HMRC’s publication A disaggregation of HMRC tax receipts between England, Wales, Scotland & Northern Ireland.

Figures on payments from public corporations are then netted off this total figure. A figure for corporation tax payments from all public corporations in the UK is included in ONS’ database underlying the Public Sector Finances.

The Scottish share from the HMRC publication is applied to the total UK public corporations’ payments to obtain a Scottish estimate which is then subtracted from the Scottish estimate of total corporation tax payments.

VAT Refunds

VAT refunds from local government and central government are apportioned differently. Local government VAT refunds are apportioned on the basis of Scotland’s share of UK local government final consumption expenditure Central government VAT refunds:

• to the Ministry of Defence are assigned on the basis of Scotland’s share of the UK population;
• to NHS are assigned on the basis of Scotland’s share of UK Total Expenditure on Services on health;
• to other government departments – on basis of Scotland’s share of total UK Total Expenditure on Services (less Ministry of Defence and NHS).

Capital Gains Tax

The UK figure for total CGT is taken from ONS’ database underlying the Public Sector Finances.

HMRC produce estimates of the amount of revenue raised from capital gains tax in Scotland for each financial year. These annual figures are converted to quarterly estimates, and the proportion of the UK revenue raised in Scotland based on these figures is applied to the total UK figure obtained from ONS’ database. The latest estimates of Scottish revenues are for 2013-14.

Other taxes on income and wealth

Other taxes on income and wealth include a number of small taxes including the following:

• Capital gains tax from households
• Company income tax revenues, net of repayments
• Household charitable donations via gift aid and covenant tax reliefs
• Betting and gaming duty (those elements of the duty that are classed as tax on income)
• OFGEM tax on Non-Fossil Purchasing Agency renewable energy income
• Inland revenue: Company IT withheld
• Horserace betting levy board
• Tax credits
• Insurance and Pension Funds
• Corporation tax credit expenditure
• Company tax credits
• Non-Profit Institutions Serving Households tax credits

Company income tax receipts, net of repayments	GVA
Household charitable donations via gift aid and covenant tax reliefs	As for income tax (SPI)
Betting and gaming duty (those elements of the duty that are classed as tax on income)	As for betting and gaming duty
OFGEM tax on Non-Fossil Purchasing Agency renewable energy income Inland Revenue: Company IT withheld	As for other renewable energy obligations As for corporation tax
Horserace betting levy board	As for betting and gaming duty
Central government contributions to payroll giving to charities	GVA
Tax credits - Insurance and Pension Funds Corporation tax credit expenditure	As for income tax (SPI)
Company tax credits	As for corporation tax As for corporation tax As
Non-Profit Institutions Serving Households tax credits	for income tax (SPI)
Climate Change Levy	Based on Scottish consumption of electricity and gas, from BEIS.
Aggregates Levy	Based on the proportion of UK aggregate production of sand, gravel and crushed rock that takes place in Scotland each year, sourced from the United Kingdom Minerals Yearbook . Exports of marine dredged sand and gravel, which are exempt from aggregates levy, are excluded from the UK total.

National Insurance

National insurance contributions (NICs) are a tax on earnings. Their payment is designed to allow the payee to build an entitlement to certain social security benefits, including the state pension. There are a number of different rates, thresholds and classes for national insurance.

The main rate, known as the class 1 rate, was 11% between 2009-10 and 2010-11, and increased to 12% for 2011-12 onwards.

The UK figure for total NICs together with separate figures for class 1 (employee and employer), class 2 and class 4 (self-employed), and class 3 (voluntary contributions paid to fill gaps in contribution records) contributions are taken from ONS’ database underlying the Public Sector Finances.

Class 1 contributions account for over 97% of the total. Scotland’s share of UK class 1, 2 and 3 contributions have been provided by HMRC. The latest data are for 2013-14 for class 1, 2010-11 for class 2, and 2008-09 for class 3. This reflects lags in producing data on self-reported receipts.

Scotland’s share of UK class 4 contributions is calculated using its share of class 2 contributions. Scotland’s share of each class of contribution is then applied to the total UK national insurance figures provided in the ONS’ Public Sector Finance Database.

Value Added Tax

Value added tax (VAT) is charged on the sale of most goods and services in the UK. Depending upon the product, VAT is charged at three different rates; during the period of the report these were: standard rate, reduced rate (5%) and zero rate. Certain services are also ‘exempt’ from VAT.

The standard rate of VAT was temporarily reduced from 17.5% to 15% on 1 December 2008, and it returned to 17.5% on 1 January 2010. The standard rate of VAT increased from 17.5% to 20% on 4 January 2011. For further details please see:

The UK figure for total VAT revenues is taken from ONS database underlying the Public Sector Finances. This total figure is made up of three main parts: net VAT, local government VAT refunds and central government VAT refunds. Net VAT revenue is then disaggregated into VAT paid by households, businesses, government, and the housing sector. Scotlands share of UK net VAT revenues paid by households is estimated from the Living Costs and Food Survey (LCF), formerly the Expenditure and Food Survey (EFS).

Scotlands share of VAT paid by businesses and the housing sector is apportioned in line with GVA. Scotlands share of VAT paid by government is apportioned in line with government expenditure. The weights of each sector are taken from HMRCs VAT Theoretical Tax Liability model. The LCF provides estimates of average weekly expenditure per household on a large number of goods and services in Scotland and the UK.

The relevant VAT rate applicable to each good/service are applied to the average amount spent on each product type to produce an estimate of the average amount of VAT paid per household on each commodity/service. Total VAT revenues are then estimated by multiplying average household VAT revenues by the number of households in Scotland and the UK.

The Scotland/UK ratio of estimated VAT revenues from private households is then applied to actual total UK net VAT revenues to estimate the value of VAT revenues attributable to Scotland. Local government VAT refunds are apportioned on the basis of Scotlands share of UK local government final consumption expenditure.

Central government VAT refunds:

• to the Ministry of Defence are assigned on the basis of Scotlands share of the UK population;
• to NHS are assigned on the basis of Scotlands share of UK Total Expenditure on Services on health;
• to other government departments on basis of Scotlands share of total UK Total Expenditure on Services (less Ministry of Defence and NHS).

Fuel Duties

Fuel duty, formally known as hydrocarbon oil duty, is an excise duty levied on the sale of oils (including road fuels). The rate of duty levied varies between fuel types.

The UK figure for total fuel duties is taken from ONS’ database underlying the Public Sector Finances. This is split into duty paid on petrol and duty paid on diesel using data from HMRC’s Hydrocarbon Oils Duties bulletin.

As with other excise duties, the estimation of revenues raised from fuel duty in Scotland is based on the premise that the burden of duty is borne by the final consumer.

Fuel duty revenues are apportioned to Scotland by estimating Scotland’s share of UK fuel consumption. UK road traffic fuel consumption and a regional breakdown, based on weighted traffic flows on a sample of roads across the UK, are published by the Department of Energy and Climate Change (DECC).

Using this information Scotland’s share of UK petrol and diesel consumption is derived. These estimates are then applied to the figure for UK revenue from each source to estimate Scotland’s share of total fuel duty.

Reserved Stamp Duties

Stamp duty is levied on conveyances and transfers of land and property and on share transactions. Stamp duty land tax (SDLT) is paid on property transactions whilst share transactions are liable for either stamp duty or stamp duty reserve tax (SDRT). In Scotland, Land and Buildings Transaction Tax replaced the UK Stamp Duty from 1 April 2015

Stamp duties in GERS also include the Annual Tax on Enveloped Dwellings, which was introduced in April 2013. This is a tax payable by companies that own residential property valued at over £2 million

For years prior to 2015-16, the UK figure for total stamp duty revenue is taken from ONS’ database underlying the Public Sector Finances.

Separate methods are used for estimating Scotland’s share of UK revenue raised from (1) land and property stamp duties, (2) stocks and shares stamp duties, and (3) the annual tax on enveloped dwellings.

1. Land and property stamp duty/Land and building transactions tax HMRC publish estimates of land and property stamp duty raised in Scotland. Outturn estimates are available up to and including 2014-15. From 2015-16, outturn data for land and buildings transaction tax are taken from Revenue Scotland.
2. Stocks and Shares Stamp Duty The Scotland/UK ratio of adults owning stocks and shares as reported in the DWP Family Resources Survey (FRS), weighted according to estimates of adult population in Scotland and the UK (those classed as aged 18+) was used to estimate the proportion of UK stamp duty from stocks and shares raised in Scotland.
3. Annual tax on enveloped dwellings HMRC publish estimates of receipts from this tax in Scotland, based upon the share of transactions of residential property valued above £1 million. This is used in place of administrative data in order to meet disclosure rules.

Tobacco Duties

Tobacco excise duty is a tax charged on cigarettes, cigars, hand rolling, pipe and chewing tobacco. Duty on cigarettes is based on a percentage of the recommended retail price, plus a specified charge per 1,000 cigarettes. Duties on cigars, hand rolling, pipe and chewing tobacco are charged according to weight. There are no exemptions or reliefs for tobacco duty. The rates of duty are set each UK Budget.

The estimation of tobacco duty raised in Scotland is based on the premise that the burden of duty is borne by the final consumer.

UK tobacco duty revenues are taken from ONS’ database underlying the Public Sector Finances. Scotland’s share of total UK private household expenditure on tobacco products is then used to derive the proportion of duty attributable to Scotland

Expenditure on tobacco products is estimated using the Living Costs and Food Survey (LCF), formerly the Expenditure and Food Survey (EFS), which collects information on average household spending patterns on a wide variety of products including tobacco. The latest Scottish data are for 2013. Total weekly spend is then estimated by multiplying average household spend by the number of households in Scotland and the UK. The ratio of tobacco expenditure in Scotland and the UK is then applied to total UK tobacco revenue to estimate the proportion of tobacco duty attributable to Scotland.

Alcohol Duties

Alcohol excise duty is a flat-rate duty on alcoholic beverages. Duty on spirits is calculated per litre of pure alcohol; cider, perry, wine and made wine are dutied in bands of alcoholic strength and calculated by volume; beer duty is calculated by strength and volume. Since flat-rates are expressed in cash terms, they are revalorised (i.e. increased in line with inflation) each year.

The estimation of alcohol duty raised in Scotland is based on the premise that the burden of duty is borne by the final consumer rather than the producer.

UK alcohol duty revenues are taken from ONS database underlying the Public Sector Finances for:

• Spirits;
• Cider and perry;
• Wine;
• Beer

Air Passenger Duty (APD)

Air passenger duty (APD) is levied on the carriage, from a UK airport, of chargeable passengers on chargeable aircrafts. There are currently four rates of duty with exemptions for certain flights, e.g. flights from the Highlands and Islands of Scotland.

Data from the Civil Aviation Authority (CAA) surveys of Scottish airports in 2005, 2009, and 2013 are combined with Scottish passenger numbers from Scottish Transport Statistics, excluding flights from the Highland and Islands and to offshore facilities. This provides an estimate of the number of Scottish passengers by each air passenger duty band on the basis of their final destination. These are combined with HMRC figures on UK APD liable passengers travelling in each duty band to estimate Scotland’s share of UK passengers by duty band. Data for the years between 2005 and 2009, and 2009 and 2013 are interpolated to provide estimates for intervening years. There is assumed to be no change in the distribution of Scottish passengers across bands before 2005 and after 2013. Estimates are produced on a calendar year basis, consistent with the CAA survey data, and converted to a smoothed quarterly series using a cubic spline.

These shares are combined with HMRC figures for air passenger duty revenues by band to derive an estimate of Scotland’s share of total UK revenues.

Insurance premium tax (IPT)

Insurance premium tax (IPT) is a tax on general insurance premiums. IPT is payable on most types of insurance in the UK and on foreign travel insurance for trips lasting less than four months. There are two rates: a standard rate of 6% and a higher rate of 20% depending upon the type of insurance purchased. There are some exceptions to IPT including life insurance.

The UK figure for total IPT is taken from ONS’ database underlying the Public Sector Finances.

The estimation of IPT revenues raised in Scotland is based on the premise that the burden of duty is borne by the final consumer.

Expenditure on insurance is estimated using the Living Costs and Food Survey (LCF), formerly the Expenditure and Food Survey (EFS), which collects information on average household spending patterns on a wide variety of products including insurance. The latest Scottish data are for 2013. Total weekly spend is then esti??

Scottish Landfill Tax

Landfill tax is a tax on the disposal of waste and is paid on top of normal landfill fees. Different rates are applied according to the type of waste being disposed of. In Scotland, Scottish Landfill Tax replaced the UK tax from 1 April 2015.

For 2015-16, the Scottish figures reflect outturn data from Revenue Scotland

Inheritance Tax

Inheritance tax is a tax on assets, exceeding a minimum threshold, transferred on or shortly before death. An individual’s estate on death for inheritance tax purposes is made up of a range of assets including those held directly in their name, their share of jointly owned assets and various other forms of asset.

The UK figure for total inheritance tax is taken from ONS’ database underlying the Public Sector Finances.

HMRC produce estimates on the amount of revenue raised from inheritance tax in Scotland. The proportion of the UK revenue raised in Scotland based on these figures is applied to the total UK figure obtained from the ONS’ database.

Vehicle Excise Duty (VED)

Vehicle excise duty (also known as road tax) is an annual charge paid by vehicle owners. For cars registered since 2001, duty is charged according to the emissions of the vehicle and the type of fuel used. For older cars, duty is charged according to the engine size.

The UK figures for both vehicle excise duty from households and vehicle excise duty from businesses are taken from ONS’ database underlying the Public Sector Finances. These figures are disaggregated into Great Britain’s (GB) revenues and revenues from Northern Ireland, as in Northern Ireland the duty is collected separately by the Northern Ireland Vehicle Agency. Northern Ireland data is not used in the apportionment to Scotland, but is used in producing UK totals published in GERS.

Data obtained from the DVLA on Scotland’s proportion of GB’s total value of licences (less exemptions) for households and for businesses are used to estimate Scotland’s share of the two elements of GB vehicle excise duty.

Non-Domestic Rates

The figure for Scotland is derived by taking Scotland’s net collectible debits from the ONS PSAT2 database, and a share of UK refunds, LA payments, and reliefs in line with Scotland’s share of UK net collectible debits.

Non-domestic rates, or business rates, are levied on occupiers of non-residential properties such as shops, offices, warehouses and factories. In Scotland, rates are calculated by multiplying a property’s rateable value, set by the local assessor, by the poundage rate, set by the Scottish Government. The standard poundage rate in Scotland in 2014-15 was 47.1 pence; i.e., a property with a rateable value of £10,000 would pay non-domestic rates of £4,710.

There are two poundage supplements applied in Scotland. Businesses with a rateable value of more than £35,000 in 2014-15 pay a supplement of 1.1 pence, which contributes toward the cost of the Small Business Bonus Scheme. Large retail properties which are licenced to sell alcohol for consumption off premises and with a ra ??

Land and Buildings Transaction Tax (LBTT)

Land and Buildings Transaction Tax replaced the UK Stamp Duty from 1 April 2015. It is a tax on purchases of commercial and residential land and buildings. The structure of the tax is designed so that the charge is proportionate to price of the property. From 1 April 2016, an additional supplement is applied to purchases of additional residential properties in Scotland, such as buy-to-let properties and second homes

Figures reflect outturn data from Revenue Scotland. For 2015-16, figures are consistent with Revenue Scotland’s 2015-16 Annual Report - Devolved Taxes Accounts. For 2017-18, figures are based on the in-year reported amounts, although there may be small differences due to timing adjustments.

Environmental levies

Environmental levies consist of Carbon Reduction Commitment and Renewables Obligation payments.

The Carbon Reduction Commitment is a mandatory scheme which aims to improve energy efficiency and cut emissions in large public and private sector energy users across the UK. Participants must monitor their energy supplies and purchase allowances to cover the associated CO2 emissions.

The Renewables Obligation places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources. Operators require certificates for the energy they generate. Certificates can be traded between operators to ensure they have sufficient to meet their scheme targets. As the scheme is mandatory, payments associated with it are regarded as a tax, even when they are not made directly to the government. As such, revenue and expenditure associated with the scheme by energy operators are included as both an imputed tax and subsidy in the public sector finances. This does not affect the fiscal balances.

Council Tax

Full council tax is levied on occupiers of a house which is their sole or main residence. There are a range of exemptions and reliefs from council tax, including a 25% reduction for single occupancy households, and between 10% and 50% reduction for dwellings which are not the main residence (i.e. second homes).

Council tax receipts for Scotland are taken directly from the Scottish Government’s Council Tax Collection Statistics 2015-16. Since the collection year for the latest rate is provisional and is typically an underestimate due to late payments, the accrued estimate for the latest year has been taken as the net amount billed multiplied by the historic collection rate across all years.

Interest and Dividends

This revenue element includes all interest and dividend payments received by the public sector from the private sector and the rest of the world. Interest payments received by public sector bodies from other UK public sector bodies are not included.

UK figures for interest and dividend revenue received by (a) public corporations, (b) local government and (c) central government, are obtained from ONS’ database underlying the Public Sector Finances. Following advice from the OBR, central government interest income is split into interest received from student loans and other interest income. Following the reclassification of English housing associations into the public sector, public corporation interest income is split into housing association and non-housing association income.

UK central government student loans income is estimated for Scotland using actual Scottish receipts in the ONS PSAT2 database. Local government and central government revenues from interest and dividends are apportioned to Scotland using Scotland’s share of UK population.

UK public corporation revenue from interest and dividends for non-housing associations is apportioned to Scotland using Scotland’s share of UK public sector GVA from the 2015 Regional Accounts publication (which currently excludes housing associations as the reclassification has not yet been implemented in the UK Blue Book). Scotland is apportioned none of the UK public corporation interest and dividends revenue from English housing associations.

Gross Operating Surplus (GOS)

Gross operating surplus (GOS) refers to the operating (or trading) surpluses (or losses) of central government, local government and public corporation trading activity.

By definition, general government GOS is equal to general government non-market capital consumption. This is a measure of the amount of fixed capital resources used up in the production process (i.e. depreciation). Since this is a public sector receipt, that does not raise actual funds, it is balanced by an offsetting item within

public expenditure. By definition, the adjustment item (NMCC) is added to public expenditure rather than subtracted on the revenue side.

For public corporations, the GOS figure includes the gross trading surplus, rental income, stock appreciation (or holding gains), and FISIM (Financial Intermediation Services Indirectly Measured).

In calculating GOS for Scotland, separate figures are estimated for:

1. Central government
2. Local government
3. Public corporations

1. The UK revenue for central government GOS is taken from ONS’ database underlying the Public Sector Finances. It is apportioned to Scotland according to Scotland’s share of UK NMCC for central government obtained from ONS Regional Accounts.

2. The UK revenue for local government GOS is taken from ONS’ database underlying the Public Sector Finances. It is apportioned to Scotland according to Scotland’s share of UK NMCC for local government obtained from ONS Regional Accounts.

3. The approach taken to estimate the GOS for public corporations in Scotland is different. The GOS of public corporations comprises the following elements:

1. Gross trading surplus (from operating activities);
2. Gross trading surplus (from artistic originals);
3. Housing Revenue Account (HRA)
4. Rental Income (excluding HRA)
5. FISIM
6. Holding Gains

For elements 1 and 4, revenue from every public corporation was obtained. Public corporations were classified as ‘Scotland’, ‘Not Scotland’, or ‘UK’, depending on their area of coverage. For those classified as ‘Scotland’, all of the revenue (Gross Trading Surpluses, Rental and FISIM) was assigned to Scotland. Public corporations classified as ‘Not Scotland’ were excluded. For ‘UK’ public corporations, revenue was apportioned to Scotland on the basis of the relevant industry GVA share. 40 Government Expenditure and Revenue Scotland 2015-16

Gross trading surpluses relating to artistic originals in general arise from the BBC and Channel 4. Scotland is apportioned a population share of this revenue.

For the Housing Revenue Account, figures were obtained directly for local authority rents from ONS.

Scotland is allocated none of the gross operating surplus associated with English housing associations.

Other Receipts

This revenue refers to rents and transfers received by central government, local government and public corporation trading activity. The largest component is local government rental income.

The UK figure for rents and other current transfers is taken from ONS’ database underlying the Public Sector Finances.

Rents and other current transfers for central government, local governments and public corporations are estimated separately.

Central government rents and other current transfers comprise the following elements:

1. Revenues for spectrum use in relation to licences for 3G mobile telephones
2. Rents on land
3. Water abstraction
4. Other spectrum revenues
5. Court fines
6. Other, e.g. speed camera fines, charitable contributions to NHS trusts

Local government rents and other current transfers comprise income of insurance and pension funds allocated to local authorities as beneficial owners.

Public corporation rents and other current transfers relate to the activities of the Export Credits Guarantee Department.

(i) Central government Central government rents and other current transfers are apportioned as follows:

• Rents on land - Public sector GVA
• Water abstraction - Public sector GVA
• Other spectrum revenues- Public sector GVA
• Court fines - Separate identification of ‘Scotland’ and ‘Non-Scotland’ revenues
• Other, e.g. speed camera fines, charitable contributions to NHS trusts - Public sector GVA
• 3G and 4G spectrum receipts - GVA

(ii) UK revenues from rents and other current transfers from Local Authorities and Public corporations are each apportioned to Scotland on the basis of Scotland’s share of UK’s public sector GVA.

North Sea Oil & Gas

North Sea revenue in GERS comes from four sources: petroleum revenue tax, corporation tax, licence fees, and the emissions trading scheme

Three estimates of Scotland’s share of North Sea revenue are adopted in the GERS report:

1. Zero share
2. A population share
3. An illustrative geographical share

Under the zero share approach, Scotland is allocated none of the revenues associated with the North Sea.

The illustrative geographical share approach bases the Scottish boundary of the UKCS on the median line principle as employed in 1999 to determine the boundary between Scotland and the rest of the UK for fishery demarcation purposes. Demarcation by the median line is highlighted by the dark shaded area. UKCS production, costs and revenue is allocated on a field by field basis to either the rest of the UK or Scotland using this boundary.

Using this methodology, all fields in the Moray Firth, Northern North Sea, West of Shetland regions of the UKCS are allocated to Scotland. Fields in the Southern North Sea and Irish Sea are assigned to the rest of the UK. The Scottish boundary, based on the median line principle, intersects the Central North Sea (CNS) region. Fields in the CNS region to the north of the median line are assigned to Scotland and fields lying to the south assigned to the rest of the UK. No fields are intersected by the median line.

The illustrative geographical share is consistent with that used by the ONS in their Country and Regional Public Sector Finances publication.

Country level proportions have been obtained from HMRC’s DoTR publication. These proportions were applied to the UK Public Sector Finances (PSF) totals to obtain country level estimates. To obtain country level estimates HMRC allocate fields between either Scotland or England. Data for each country are estimated separately using HMRC’s North Sea oil and gas revenues forecasting model. The underlying data in the model come from a field-by-field survey provided by operators which covers production and expenditure. Economic variables such as oil prices and exchange rate are provided by the Office for Budget Responsibility. This produces separate forecasts for Scotland and England which are used to disaggregate offshore CT receipts. Further details can be found in HMRC’s DoTR Methodology guide.

Allocating North Sea revenues to countries and regions is complex and many factors need to be considered. In order to produce estimates for English regions, a simple approach was taken to and is based on field level production of oil and gas.

The Scottish Adjacent Waters Boundaries Act 1999 apportions North Sea oilfields between Scotland and England. To differentiate between other NUTS 1 regions, the boundaries for the regions are extended outwards from the coast along their median lines. Monthly extraction records for each well were retrieved and aggregated in to output per financial year. These outputs were then matched to the regional placement of each well, giving outputs of oil and gas for the English regions. Oil, associated gas (from oily deposits) and dry gas (from very low oil deposits) are each recorded separately. These data were then used to disaggregate the England total.

For PRT revenues, HMRC use administrative data provided by its own Large Business Directorate. As this is field level, this is used to identify and split the tax receipts between England and Scotland. As with offshore corporation tax, country level proportions for are obtained from the DoTR publication and English regions are estimated using the same method as for corporation tax.

This is a change in methodology from previous years which has for most years resulted in a downward revision of Scotland's share of North Sea Revenue

NOTE: For the purposes of this GERS explorer we are using the Geographic share only.