CW Energy LLP

Budget update – Abolition of PRT and tariffs

When the tax exempt tariff (TETR) rules were introduced over 10 years ago we understand that government secured an undertaking from major infrastructure owners that they would pass on the benefit arising from the fact that new tariffs were taken out of the charge to PRT to the users of the infrastructure.

However, although such tariff income was exempt from PRT the host field was required to disallow part of their cost for PRT to reflect the use of qualifying assets in earning the exempt tariffs. There was still therefore a PRT cost to the host field owners.

Now that PRT has effectively been abolished, i.e. set at a 0% rate, this implies that there is a windfall for a number of the fields earning such tariffs as there will no longer be the increased PRT liability as a result of the disallowed costs for a number of these fields.

Other infrastructure owners earning taxable tariffs may also be in a better position following the reduction to 0%.

Therefore companies in user fields which pay tariffs to PRT infrastructure owners should review their position and revisit their tariff agreements to see whether there is any opportunity to negotiate reduced tariff rates to reflect this PRT windfall.

If companies should like to discuss this area please get in touch with your normal CW Energy contact.