Corporation tax ring fence: onshore allowance - overview
Onshore allowance provides relief for certain capital expenditure incurred for the purposes of onshore oil-related activities and is given by way of reduction of a company’s adjusted ring-fence profits.
The allowance replaces existing field allowances for all onshore fields whose authorisation day is on or after 5 December 2013 although there are transitional provisions whereby the authorisation day is effectively deferred to 1 January 2015. The deferment of the authorisation day is made by joint election of all licensees in the oil field concerned.
The main features of the allowance are:
- the need for allowance held for a site to be activated by relevant income from the same site in order for the allowance to be available for reducing adjusted ring-fence profits,
- elections by a company to transfer allowance between different sites in which it is a licensee (see S356F), and
- mandatory transfers of allowance where shares in the equity in a licensed area are disposed of (see S356H to S356HB and the related provisions in S356G to S356GD).