George Osborne unveils tax breaks for oil and gas industry

 

More tax breaks designed to bolster investment in North Sea oil and gas were unveiled by George Osborne today.

The Chancellor said income from older fields will be spared from paying full duty to ensure they are fully exploited.

It is the latest in a series of reliefs introduced for the industry, after the coalition Government was criticised for hiking the supplementary charge on North Sea producers from 20% to 32% last year.

The new Brown Field Allowance will shield up to £500 million of income from the charge when firms are boosting production from established oil or gas fields - potentially cutting their tax bill by £160 million.

The move is expected to cost the Exchequer £100 million per year initially - but officials insist long-term tax revenues will be significantly higher.

Mr Osborne said: "Today's tax 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.

"Just last week, I saw the benefits at a supply chain factory creating many hundreds of jobs in the North East thanks to Government support for North Sea gas which made a major project possible."

Scottish First Minister Alex Salmond said: "After imposing the draconian supplementary tax on Scotland's North Sea industry, threatening thousands of jobs and billions of pounds in investment, it seems that the Chancellor is finally recognising the vital importance of the oil and gas sector.

"This is just one of the measures I have been calling for over the last year; for the Chancellor to move to plan B for the North Sea. He needs now to move to a plan MacB for the rest of the economy.

"Oil and gas production now contributes £32 billion to the UK's balance of payments, with the supply chain adding a further £5-6 billion - more than halving the UK's trade deficit. The industry supports almost 200,000 jobs in Scotland and has generated almost £300 billion, at today's prices, in taxation revenues.

"More than half of the value of the North Sea's oil and gas reserves have yet to be extracted. That's 24 billion barrels with a wholesale value of £1.5 trillion."

Alan McCrae, head of UK energy tax at accountants PwC, said: "This is a very helpful step in the right direction and should be warmly welcomed by the industry and taxpayers alike.

"The UK's current rate of tax for North Sea production is extremely high at 62% for newer fields and 81% for those subject to Petroleum Revenue Tax, and these rates are making some investment unviable.

"By reducing those rates for future production from investment in existing fields, more investment will be stimulated. As well as creating jobs now, this should help future North Sea production and future tax revenues.

"This measure recognises that investment in existing fields is every bit as important as new exploration in the fight to produce as much from the North Sea as possible."

PA

News
i100
News
people Emma Watson addresses celebrity nude photo leak
News
The Prostate Cancer Foundation is returning all donations made by Redditors 'in honour' of Jennifer Lawrence and her naked photos
news

Website users raised funds after Jennifer Lawrence nude photo leak

News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
news

The Tardis-style house measures in at just 83 inches wide

News
advertising
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Teaching Assistant

Negotiable: Randstad Education Group: Randstad Education require a Drama speci...

Science Teacher

£120 - £162 per day: Randstad Education Hull: Science Teacher - Full Time - Lo...

Maths Teacher

Negotiable: Randstad Education Group: Randstad Education is looking for a Seco...

General Cover Teacher

£120 - £162 per day: Randstad Education Hull: Randstad Education are looking f...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York