The late-night move came just 12 hours before Phil Hammond, MP, is due to announce his first budget of Prime Minister Theresa May’s government.
In his first Budget (on 8 March) the Chancellor will confirm that the UK Government will publish a discussion paper and establish a panel of industry experts to consider how tax can assist sales of oil and gas fields, helping to keep them productive for longer.
See how Scottish Energy News broke the story earlier today:
This comes after Oil and Gas UK, the industry representative body, have called for reforms to the rules saying: “Oil & Gas UK believes that more can be done to facilitate the transfer of assets in the basin and so stimulate additional investment. This is why industry is continuing to ask the Treasury to revise the tax treatment of decommissioning liability in support of this.”
It also follows a recent letter from Scottish Finance Minister Derek Mackay, MSP, to the Chancellor calling for reform in this area where he said: “There must be action to improve decommissioning tax relief, ensuring that the right assets are in the right hands”
A spokesman for the British Treasury said: “These responses and the views of the expert panel will help the government consider options that will further help this vital industry that meets around 50% of the UK’s primary energy needs – building on the unprecedented support already provided to the oil and gas sector through £2.3 billion packages in the last three years.”
Lord Andrew Dunlop, the deputy British Government minister for Scotland, added: “This is really positive news for Scotland’s oil and gas industry.
“There are very significant reserves still in the North Sea, and it is vital that the UK Government does all it can to help the industry maximise these.
“Our oil and gas industry is very much open for business, and the North East (Scotland) is a great place to invest. We need to ensure that our tax regime helps support the industry in the most appropriate way.”
What is the Investment Allowance?
The Investment Allowance is an allowance against tax that only applies to oil and gas companies. The Investment Allowance is only available against one of the three oil and gas taxes i.e. the Supplementary Charge.
The measure supports the Government’s objective of providing the right conditions for business to invest in the UK and UKCS to maximise the economic recovery of the UK’s oil and gas resources, at a time when the North Sea industry is facing considerable challenges.
Building on the introduction of the Investment and Cluster Area allowances, the measure aims to encourage further investment in the UK and UKCS, leading to increased production of oil and gas, helping to increase the UK’s energy security, and supporting jobs and supply chain.
This is why industry is continuing to ask the Treasury to revise the tax treatment of decommissioning liability in support of this.