Months of falling oil prices have taken their toll on companies in the region, and yesterday George Osborne answered the industry’s pleas to reduce the tax burden on North Sea operators.
The supplementary charge, a tax that firms must pay on top of corporation tax, has been cut from 30 per cent to 20 per cent, bringing it back to the level it was at when Osborne became chancellor. This could bring total tax on firms in the region from a minimum of 60 per cent to a minimum of 50 per cent.
The Budget also saw the introduction of a new investment allowance, aimed at stimulating investment “at all stages of the industry life cycle”.
Meanwhile, the rate of petroleum revenue tax is being cut, from 50 per cent to 35 per cent. This tax only impacts fields that received development approval before 16 March 2014, so the reduction will benefit the more established operators in the North Sea.