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HMRC internal manual

Oil Taxation Manual

Field allowance: transfer of field allowance where the equity share changes

Where a company disposes of all or part of its share in the equity in a field, all or part of the unactivated amount of the field allowance for the field transfers to the transferee.

For the transferor, the unactivated amount is reduced by the fraction:

(E1 - E2)/E1


  • E1 is the transferor’s share of the equity in the field immediately before the disposal, and
  • E2 is the transferor’s share of the equity in the field immediately after the disposal.

The unactivated amount available for a transferee depends on whether the transferee has acquired all or part of the transferred interest.

The unactivated amount which passes to the transferee is given by the formula:

R x E3<u>/</u>(E1 - E2)


  • R is the amount of the reduction determined for the transferor,
  • E3 is the share of the equity in the field that the transferee has acquired from the transferor, and
  • E1 - E2 is (following the meaning above) the share disposed of by the transferor.

**  This guidance is superseded by the introduction of the Investment Allowance legislation in Finance Act 2015.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.  **