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HMRC internal manual

Oil Taxation Manual

Field allowance: the background and underlying policy

The policy aim of the field allowance when introduced in 2009 was to provide an incentive for the development of new economic but commercially marginal oil and gas fields.

FA 2012 amended the Field Allowance legislation to permit the Government to introduce allowances targeted at commercially marginal projects in existing fields by way of secondary legislation. An eligible oil field is now defined as ‘an oil field which is an additionally-developed oil field or a new oil field’.

These amendments made by FA 2012 came into force on 17 July 2012 and comprised

  • changes to CTA2010\S349 (orders)
  • the insertion of the section providing the definition of An additionally-developed oil field (CTA2010\S349A), and
  • the definition of an eligible oil field. 

The other amendments to the field allowance legislation made by FA2012 came into force on 1 April 2013 by virtue of an order made by the Treasury (SI2013 No.744).

** This guidance is superseded by the introduction of the Investment Allowance legislation in Finance Act 2015. This applies to investment expenditure incurred on or after 1 April 2015.  The relevant legislation is in Part 8 Chapter 6A of CTA 2010.  Transitional rules are at paragraphs 7 and 8 of Part 2 Schedule 12 Finance Act 2015.  Full updated guidance will be provided shortly.  **