Chancellor George Osborne guaranteed tax relief for North Sea oil and gas companies as part of his 2015 Budget announcement today.
He confirmed the so-called Supplementary Charge would be reduced from 30% to 20% with immediate effect and would introduce an allowance aimed at boosting investments that have dropped as a result of falling oil prices.
Mr Osborne said: “It’s clear to me the fall in oil price poses a pressing danger to the future of our North Sea industry unless we take a bold and immediate action. And I take that action today.”
The Chancellor had announced a 2% cut in his Autumn Statement last December.
The rate of Petroleum Revenue Tax – i.e. the tax on the profits from oil and gas production in the UK or on the UK Continental Shelf – paid on older oil and gas fields will also fall from 50% to 35%.
These changes are expected to increase oil production by around 15% by 2019 and drive £4 billion of new investment over the next five years, Mr Osborne said, adding an independent Scotland “would never have been able to afford such a package of support”.
The government also plans on investing in seismic surveys in “underexplored areas of the UK Continental Shelf”.
Fuel duty will be frozen again, which is expected to save drivers around £10 “every time they fill up the car”, £100 million has been pledged for driverless cars and support for low emission vehicles and negotiations on the £1 billion tidal lagoon scheme in Swansea will open soon.