In addition to ring fence corporation tax, oil and gas companies are also subject to a supplementary charge of 32% on adjusted ring fence profits arising from oil related activities. The introduction of a new onshore allowance, effective from 5 December 2013, will reduce the amount of adjusted ring fence profits subject to this charge. These changes will affect companies involved in exploration, appraisal and development of onshore oil and gas.
This measure has been introduced to support the early development of onshore oil and gas projects such as shale gas and other hydrocarbons and is designed to simplify the regime replacing field allowances which currently exist for on-shore projects. The new allowance will reduce the effective tax rate for affected companies from 62% to 30%.
For more information or to discuss the proposed changes contact the TaxDesk on 0845 4900 509 and ask for Martin Mann.