UK offers 30% tax rate for shale gas
19 Jul 2013
Chancellor George Osborne announces “most generous tax regime in the world” for Shale developers.
British chancellor George Osborne today announced that developers of Shale gas projects in the UK will only have to pay 30% tax on their revenues, compared to a top rate of 62% on new North Sea oil operations.
Speaking this morning at an Organisation for Economic Co-operation and Development (OECD) conference in Russia, Osborne said: “Shale gas is a resource with huge potential to broaden the UK’s energy mix. We want to create the right conditions for industry to explore and unlock that potential in a way that allows communities to share in the benefits.
“This new tax regime, which I want to make the most generous for shale in the world, will contribute to that. I want Britain to be a leader of the shale gas revolution - because it has the potential to create thousands of jobs and keep energy bills low for millions of people.”
Following Osborne’s announcement, the Treasury launched a new consultation on the proposed tax regime.
Shale gas is a resource with huge potential to broaden the UK’s energy mix
Chancellor George Osborne
The consultation proposes that shale developers would be offered pad allowance - the pad being the drilling and extraction site - that would exempt a portion of production income from a 32% charge normally paid on top of a 30% tax rate.
The proposals were welcomed by those exploring potential sites for hydraulic fracturing in the UK.
Cuadrilla Resources chief executive Francis Egan said: “Cuadrilla welcomes the publication of the Government’s consultation on a proposed tax regime for the emerging shale gas industry.
“We will need to carefully consider the details in full regarding what these mean for Cuadrilla. Whilst we are still in the exploration phase, we believe that shale gas has the potential to make a considerable contribution to the UK’s energy supply and security, while at the same time creating thousands of jobs and generating very significant tax revenues and community benefits.”
A recent report by the British Geological Survey revealed that there is more than twice as much shale gas in the north of England than there was thought previously to be in the entire country.
However, earlier this week the UK water industry warned it posed a serious threat to the country’s potable water supply.
