There were no new direct tax measures announced by the Chancellor in the Autumn Statement today which are likely to be of importance to our oil and gas clients. The Statement did however confirm that the rate of Ring Fence Expenditure Supplement will be increased from 6% to 10% for periods beginning on or after 1 January 2012.
RFES is available to uplift a company’s ring fence trading losses for a maximum of six periods. A group must have an overall ring fence loss in order to enjoy this relief. The Statement included an estimate of the cost of the increase, starting at £5m in 2013/2014 and peaking at £50m in 2015/16. These figures would appear to under-estimate the potential value of this measure to industry, particularly as we believe that there may be a number of planning opportunities available for groups to optimise their position.
There appears to be nothing in the documents dealing with the proposed 50% cap on relief for decommissioning expenditure that was announced at the time of this year’s Budget. However draft Finance Bill 2012 clauses, and all of the supporting information is to be published on 6 December 2011, and we expect this measure to be included.
The Statement also announced that the fuel duty increase of 3.02p per litre that was due to come into effect on January 1 2012 has been deferred until August 1 2012, and that the inflation increase due to come into effect on that latter date is to be abolished. These changes are projected to cost the Exchequer nearly a £1bn a year from 2012-13.
Readers will be aware that it was a desire to finance a fuel duty saving that led to the unwelcome increase in supplementary charge in this year’s Budget, and it is to be welcomed that Government have not sought to use that financing tool again!
November 29, 2011