PwC: Change to oil & gas tax will stimulate jobs

By Rob Starr, Content Manager, Big4.com

A tax allowance for certain mature fields, known as brown fields, will shield a portion of income from the Supplementary Charge, which the government hopes will encourage companies to invest in existing fields and infrastructure in the UK Continental Shelf. The Chancellor of the Exchequer has  announced this new tax measure for older oil and gas fields in the North Sea, which the government hopes will increase tax revenues from the industry.

“This is a very helpful step in the right direction and should be warmly welcomed by the industry and taxpayers alike. The UK’s current rate of tax for North Sea production is extremely high at 62% for newer fields and 81% for those subject to Petroleum Revenue Tax and these rates are making some investment unviable,” says  Alan McCrae, head of UK energy tax at PwC. ” By reducing those rates for future production from investment in existing fields, more investment will be stimulated. As well as creating jobs now, this should help future North Sea production and future tax revenues. This measure recognises that investment in existing fields is every bit as important as new exploration in the fight to produce as much from the North Sea as possible.”