Budget 2017: North Sea oil and gas given tax breaks in push for investment

The North Sea oil and gas sector will get long-called-for tax breaks from November 2018 to spur more investment into the moribund industry.

The Chancellor will introduce transferable tax breaks on old oil and gas fields sold to new owners, who are often put off buying the assets due to the high cost of decommissioning them when they run dry.

The changes, details of which will be thrashed out next year, will see the current owners of oil assets pass on some of their corporation tax history onto new owners so they can receive the tax breaks, making it more attractive to buy the fields and keep them running.

Hammond called it an “innovative” tax policy for the basin, which still holds 20 billion barrels of oil.

EY’s head of oil and gas tax Derek Leith said the move was an “unprecedented” change to UK oil and gas tax law.

“The proposed changes, the details of which will be worked through in 2018, have the potential to revitalise the UK oil and gas industry,” he said.

The North Sea oil sector, concentrated in Aberdeen, has seen a swathe of job losses and company mergers driven by the global slump in the oil price since 2015.

“North Sea decommissioning is a major industrial challenge for the UK and one that will last for decades,” AIG Europe’s Gordon Browne said.

“New operators with the skills and commitment to keep our energy resources flowing are being discouraged from entering the market and the industry needs to find solutions to resolve this.”