Section 51 and Schedule 14: Amendments Relating to Investment Allowance and Cluster Area Allowance
Summary
1.This section and Schedule introduce further amendments to Corporation Tax Act 2010 (CTA 2010) that flow from the new investment and cluster area allowance legislation.
Details of the Section
2.Section 51 introduces Schedule 14, which has two Parts.
Details of the Schedule
Part 1 – Amendments of CTA 10
3.Paragraph 2 amends existing section 270 (overview of Part) to insert a reference to new Chapters 6A and 9 and to omit reference to Chapter 7.
4.Paragraph 3 amends existing section 330 (supplementary charge) to insert a reference to new Chapters 6A, 8 and 9 and to omit reference to Chapter 7.
5.Paragraph 4 introduces a new section 330ZA enabling companies who hold allowance under more than one chapter to choose the order in which they are applied.
6.Paragraph 5 substitutes the new reference to authorisation of development, inserted by Paragraph 7.
7.Paragraph 6 omits the reference in the onshore allowance at 356DB, which enabled companies to choose the order in which allowances can be applied. This is replaced by new section 330ZA in Paragraph 4.
8.Paragraph 7 inserts a new section 356IB on the meaning of “authorisation of development” for oil fields.
9.Paragraph 8 amends the definition of “adjusted ring fence profits” to include reference to new section 330ZA.
10.Paragraph 9 updates Schedule 4 (index of defined expressions).
Part 2 – Commencement
11.Paragraph 10 specifies the dates from which the amendments in this schedule have effect.
Background Note
12.In addition to ring fence corporation tax (RFCT), oil and gas companies are also subject to an additional tax, the supplementary charge (SC), on adjusted ring fence profits arising from oil-related activities. The rate of SC is currently 20 per cent.
13.Field allowances provide relief by reducing the amount of adjusted profits on which SC is due for oil and gas projects which meet certain conditions. Existing field allowances and the onshore allowance are provided by Part 8, Chapters 7 and 8 CTA 2010, and apply to fields, projects and sites which satisfy the relevant criteria.
14.The new investment and cluster area allowances will help provide the right conditions for business investment to maximise the economic recovery of the UK's oil and gas resources' and simplify the existing regime of field allowances, and encourage exploration and appraisal within the surrounding area (or “cluster”).
