North Sea tax deal spelt out
5 Dec 2014
The government yesterday revealed further details of the tax relief for North Sea oil & gas announced by chancellor George Osborne on Wednesday.
Osborne used his autumn statement to cut the supplementary charge from 32% to 30%, extend the ring-fenced expenditure allowance from six years to 10 years and create a new cluster area allowance.
We’re incentivising the industry to develop new areas of exploration
Danny Alexander
Chief secretary to the Treasury Danny Alexander yesterday revealed that the cluster area allowance would be for high pressure, high temperature projects, while also revealing a number of further measures.
These include:
- A simplifying of the tax regime through the introduction of a single basin-wide “investment allowance”, designed to reduce the effective tax rate for companies investing heavily in the UK Continental Shelf (UKCS)
- An additional £6 million of funding for industry regulator the Oil and Gas Authority
- Financial support for seismic surveys in under-explored areas of the UK Continental Shelf
“We’re incentivising and working with the industry to develop new investment opportunities and support new areas of exploration,” said Alexander.
“This will help ensure that the industry continues to thrive and contribute to the economy.”
The government also plans to open discussions with the Oil and Gas Authority on ways to remove fiscal barriers to extend the life of critical infrastructure, in addition to providing access to relief on the decommissioning of assets.
