Introduction Background Note
37.In addition to ring fence corporation tax (RFCT), oil and gas companies are also subject to an additional tax, the supplementary charge (SC), on adjusted ring fence profits arising from oil-related activities. The rate of SC is currently 20%.
38.Field allowances provide relief by reducing the amount of adjusted profits on which SC is due for oil and gas projects which meet certain conditions. Existing field allowances the onshore allowance, and the cluster area allowance are provided by Part 8, Chapters 7, 8 and 9 CTA 2010, and apply to fields, projects and sites which satisfy the relevant criteria.
39.This new allowance will help provide the right conditions for business investment to maximise the economic recovery of the UK's oil and gas resources' and simplify the existing regime of field allowances.
40.This measure was announced at Autumn Statement 2014 and a shortened consultation entitled Fiscal reform of the UK Continental Shelf: consultation on an investment allowance was launched on 22 January and closed on 23 February 2015. The government’s response to this consultation was published on 20 March 2015.