»Ê¹ÚÌåÓýapp

[Field Allowance was superseded by Investment Allowance which was introduced by Fiance Act 2015 and applies to expenditure incurred on or after 1 April 2015. See OT21550 for guidance on Investment Allowance.]

»Ê¹ÚÌåÓýapp total field allowance available for a new oil field is:

• Ultra heavy oil field: £800 million.
• Ultra HP/HT field: the amount of the relief depends on the temperature, which must exceed 166 Celsius. »Ê¹ÚÌåÓýapp maximum relief of £800 million is available where the oil temperature is 176.67 Celsius or more, reducing on a virtual straight line basis to a figure of £500 million at 166 Celsius.
• Small oil or gas field: the amount of the relief depends on the size of the field. For a transboundary field the reserve size of the whole field must be considered and the whole allowance is available to the UK licensees.

• For fields whose development was authorised for the first time up to and including 20 March 2012 the allowance is £75 million if the field has oil equivalent reserves of 2.75 million tonnes or less. »Ê¹ÚÌåÓýapp allowance available reduces on a straight-line basis from £75 million to zero as the field size increases from 2.75 to 3.5 million tonnes. (2.75 million tonnes is broadly equal to 20 million barrels; 3.5 million tonnes is broadly equal to 25 million barrels).
• For fields whose development was authorised for the first time on or after 21 March 2012 the allowance is £150 million if the field has reserves of 6.25 million tonnes or less. »Ê¹ÚÌåÓýapp allowance reduces on a straight-line basis from £150 million to zero as the field size increases from 6.25 to 7 million tonnes.

• Deep water gas field: the amount of the relief depends on the length of the proposed new pipeline and on the number of deep water gas fields authorised on the same day. »Ê¹ÚÌåÓýapp maximum relief of £800 million is available where the pipeline length is 120 kilometres or more, reducing on a straight line basis to nil at 60 kilometres. Where more than two deep water gas fields are authorised on the same day, the maximum relief is £1,600 million divided by the number of those fields.
• Large deep water oil field: the amount of the relief depends on the size of the field. »Ê¹ÚÌåÓýapp maximum relief of £3 billion is available where the reserves are 40 million tonnes or less. »Ê¹ÚÌåÓýapp allowance reduces on a straight line basis to nil as the reserves increase from 40 million tonnes to 55 million tonnes.
• Large shallow water gas field: the amount of the relief depends on the size of the field and of any related field. »Ê¹ÚÌåÓýapp maximum allowance of £500 million is available where the reserves of gas of the field and any related fields total 20 billion cubic metres or less. »Ê¹ÚÌåÓýapp allowance reduces on a straight line basis to nil as the reserves increase from 20 bcm to 25 bcm. »Ê¹ÚÌåÓýapp allowance is prorated between the field and any related fields by reference to reserves.

If a field qualifies under more than one of the criteria it will benefit from the greater of the allowances available.

With the rate of supplementary charge at 32% a field allowance of £150 million for a small field can reduce a licensee’s tax liability by up to £48 million, while an allowance of £800 million can reduce a licensee’s tax liability by up to £256 million.