It was announced in today’s budget that the headline rate of tax paid on UK oil and gas production will be reduced from 50-67.5% to 40% across all fields.
Deirdre Michie, Oil & Gas UK’s chief executive, commented: “We welcome these measures as they will build on the industry’s achievements in improving efficiency in the face of low oil prices, boosting the sector’s competitiveness and helping to restore investor confidence. “
The Budget also provided certainty on the availability of decommissioning tax relief, where an asset is transferred but the decommissioning liability is retained by a previous owner, assisting the asset trading market.
Oil & Gas UK, amongst a number of organisations, has been calling on the Government to support the competitiveness of UK oil and gas production and lighten the burden of special taxes paid by the sector in order to attract international investment back into the UK and sustain activity in the years ahead.
Derek Henderson, senior partner for Deloitte in Aberdeen, added: “Today’s oil & gas tax package demonstrates that government has been listening to the acute challenges facing the North Sea in 2016.
“While the OBR estimates that the proposed changes will reduce the UK North Sea tax burden by £1 billion over the next five years, it is over the longer term that the benefits will be felt by the industry.
“The UK now needs to compete harder for its share of global investment than ever before and retaining activity and expertise during the downturn will be critical to secure the long-term future of the UK North Sea.”