Treasury announces tax relief proposals for oil companies

Date: 27th January 2010

British firms working in the oil industry may be in need of tax advice after HM Treasury announced new measures which could result more than £160 million of tax relief.

Companies operating in the West of Shetland region, which is notorious for being "difficult to exploit", could be among those to benefit from the boost.

The news follows the introduction of new legislation designed to increase the development of gas and oil exploitation sites in the region.

Chancellor of the exchequer Alistair Darling said the move would help the UK to maximise the potential of its natural resources.

"The government recognises the importance of the UK oil and gas industry to our economy and the dependable foundation it provides for the UK's energy security," he said.

"We must ensure that the UK taxpayer receives a fair return from the extraction of our national resources and we are committed to maximising the economic exploitation of the UK's reserves."

The government explained that the legislation meant an amount of income from the sites would be exempt from the supplementary charge.

However, any profits earned on the fields would still be deducted 30 per cent under the ring fence corporation tax.