The chancellor has announced plans to introduce a tax measure that will make investment into ‘brown field’ North Sea areas easier.
The allowance, targeted at companies with older fields, will protect the profits from incurring supplementary charges.
Announcing the break, George Osborne said:
“[This] allowance is more good news for the North Sea, good news for jobs and good news for the broader economy.
“It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers.
“This government has signalled its absolute determination to get more investment in the North Sea, a huge national asset.”
Creating investment is a big concern for the Government, with the oil and gas industry in Scotland seen as being a prime candidate. Many companies are already managing to forge ahead through new commercial finance strategies such as invoice factoring.
However, with such plans as those announced by Osborne, additional investment could be forthcoming.
Responding to the news, Oil and Gas UK said that the break could create an additional £2bn of investment.
Mike Tholen, the industry body’s economics director, said:
“The chancellor is right to recognise that many of the older fields in the UK struggle to attract new investment, and this is a bit of a shot in the arm for them.
“I’m very confident that there will be some big investments announced in the very short-term.”
The tax measure works by shielding qualifying projects from the supplementary charge rate, increased by the Westminster coalition to 32 per cent in March 2011.