Oil industry hopes for tax reform boost
REFORMED tax incentives could boost UK oil output by up to three billion barrels and increase overall tax revenues, according to an industry body that believes George Osborne is considering its plan.
Oil and Gas UK hopes the chancellor will extend the field allowance tax breaks which allow increased development of “challenging” oil fields – those which are small, composed of ultra-heavy oils, or at high temperatures and pressures.
The industry body also hopes for more certainty around tax relief on facilities that will be decommissioned.
Such measures could cost the taxman a total of £110m but may earn that back as they would help “maximise the UK’s reserves and keep the industry going, providing jobs and energy security,” a spokesperson said.
“We are very encouraged by the positive course the conversations with the Treasury have taken,” she told City A.M.
The Treasury refused to comment ahead of next month’s budget.
Last year the industry was hit by an extra £2bn in taxes – described by the Energy and Climate Change Select Committee as an “opportunistic raid”, which damaged confidence and could reduce investment.