As outlined in last week’s Autumn Statement, tax on a portion of a company’s production profits – today confirmed at 75 per cent of the amount invested – will be slashed from 62 per cent to 32 per cent. The new tax regime is for all onshore oil and gas projects, including shale gas.
The government also confirmed that communities will receive £100,000 for each project, regardless of whether it is successful, as well as one per cent of the revenue from successful projects.
The new legislation, which will be included in next year’s finance bill, will be applicable from last Thursday to all new developments that are expected to produce under 7m tonnes of oil.
“[The new regime] will provide certainty to industry and ensure the UK is open to new investment in this important industry which has the potential to bring jobs, growth, energy security and bring down prices,” said the Treasury.
The government has been extremely enthusiastic about the potential of shale gas, but environmentalists argue that the fracking technique used to extract the gas causes earth tremors.