June Budget – North Sea Fiscal Regime
The Government have announced further changes to the package of measures that were introduced in Finance Act 2009 to provide support to oil and gas companies that operate in the UK or on the UK Continental Shelf (UKCS).
One of the changes in Finance Act 2009 ensured that a chargeable gain would not arise in certain circumstances where disposal proceeds were reinvested in new oil trade assets and the disposal and acquisition qualified for rollover relief. The 2011 Finance Bill will widen the scope of this reinvestment relief so it can apply when proceeds are reinvested in exploration and development expenditure, including drilling costs, with retrospective application to disposals made on or after 24 March 2010.
The Government will also introduce legislation in the next Finance Bill to ensure that reinvestment relief will apply in a group context where the company making the reinvestment is not the same company that made the disposal. The change will have effect in relation to disposals made on or after 24 March 2010. There are also a number of other changes to be introduced in Finance Bill 2011.
In addition the field allowance thresholds to qualify as an ultra high pressure/high temperature (HPHT) field will be reduced by 29 July 2010.