The U.K. Treasury said it will increase a tax allowance to encourage investment in North Sea oil production as it seeks to soften the impact of tax increases announced in the March budget.
The Ring Fence Expenditure Supplement for the North Sea will rise to 10 percent from 6 percent, the Treasury said in a statement today. The move aims to increase investment in marginal fields that qualify for the current allowance.
“Today’s change demonstrates our commitment to ensure current allowances work effectively and equitably, and lays the groundwork for further constructive discussions on field allowances,” Treasury minister Justine Greening said. The Treasury said the cost of the break is likely to be about 50 million pounds ($80 million) a year. Today’s announcement would help smaller companies with lower profits to go ahead with investment programs, the Treasury said.
In the budget, Chancellor of the Exchequer George Osborne raised taxes on oil-production profits to help alleviate prices motorists pay at the pump. The Treasury said the latest move comes following talks with industry since the budget.
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