UK Summer budget

Following UK Chancellor George Osborne’s Summer Budget, Deidre Michie, Oil and Gas UK’s Chief Executive, welcomed broadening of the investment allowance and the phased 2% cut in corporation tax for non-ring-fenced trade. She said: ‘With continued signs that investment in the UKCS is falling rapidly, it is vital that the scope of the investment allowance, announced in the March Budget, now encourages all forms of productive investment if it is to provide the strongest engine for growth. We are pleased the government has taken steps to extend this allowance and eagerly await the required legislation by the end of the summer. In addition, the 2% cut in corporation tax over the next five years will support companies throughout the sector’s supply chain.’

Also announced in the UK Summer Budget, exemption from the climate change levy (charged on renewable gas, electricity and other energy products to business) is to end on 1 August 2015. ‘This measure is part of a change of focus by the government from providing support for renewable source generation indirectly, through CCL exemption, to a more direct approach, by entering long-term agreements with generators to guarantee future energy revenues,’ commented Daniel Lyons, Indirect Tax Partner at Deloitte. ‘The government is also concerned that the financial benefit of CCL exemption has increasingly been available to offshore [wind] generators. This measure will bring it to an end... and may have little impact on energy costs.’