Autumn Statement 2014: New oil and gas cluster allowances

Subject to specific reductions, companies involved in exploration, appraisal and development of oil and gas are subject to supplementary corporation tax charges on ring fenced profits.

The government will introduce an allowance to support and encourage exploration of oil and gas in high pressure, high temperature (HPHT) areas or ‘cluster’. The allowance will exempt an amount of profit equal to 62.5% of the qualifying capital expenditure a company incurs on or after 3 December 2014, in relation to a HPHT cluster area.

Those oil and gas companies operating in HPHT areas will welcome this announcement.