Background Note
8.Supplementary Charge applies to companies producing oil and gas in the UK or on the UK Continental Shelf. Special tax rules apply to such companies. A ‘ring fence’ is placed around their profits which are treated as a separate trade from the companies’ wider activities. This means that the ring fenced profits cannot be reduced by losses from other activities carried on by the company or from losses arising to other companies in the same group.
9.Supplementary Charge is applied to adjusted ring fence profits. These are defined as the amount of profit (or loss) arising from any ring fence trade but excluding any financing costs.
10.Supplementary Charge was introduced in 2002 at a rate of 10%. This was increased to 20% for accounting periods beginning on or after 1 January 2006 and to 32% for accounting periods beginning on or after 24 March 2011. This reduction will help provide the right conditions for business investment to maximise the economic recovery of the UK’s oil and gas resources.
