Autumn Statement, not just Shale!5 Dec 2013 23:04
1.178 This also includes incentivising investment in the exploration for, and development of, the
country’s indigenous oil and gas resources, including shale gas, to put downward pressure on
wholesale prices and increase the UK’s security of supply.
Autumn Statement 2013 announces
a new tax allowance to kick start the exploitation of onshore oil and gas (including shale gas)
Autumn Statement 2013 49
in the UK.
The economic benefits that shale gas could bring – thousands of jobs, billions of
pounds of business investment, and lower energy bills – would extend beyond oil and gas to
other manufacturing sectors, which is why major industrial employers have publicly supported
its development.
1.179 The new tax allowance builds on the success of offshore field allowances in increasing
investment in technically and commercially challenging fields.
Like existing field allowances,
it reduces the tax rate on a portion of a company’s profits from 62% to 30% to reflect the
challenging nature of these developments. Companies will receive an allowance equal to 75% of
their capital spend on these projects.
1.180 Independent analysis shows that this allowance makes the UK tax regime for shale gas
the most competitive in Europe.76 Evidence collected from operators also indicates that the
allowance makes the effective tax rate for shale gas projects lower than in the US – making the
UK an attractive, competitive opportunity for global operators.
1.181 The work the government has done is already creating the right environment for
companies to invest, as demonstrated by several recent announcements by large oil and
gas companies who have made big investment commitments to explore the UK’s shale gas
resources.
1.182 In addition to putting the right tax regime in place to encourage business investment,
the government is committed to ensuring local communities benefit from shale gas projects and
to streamlining the regulatory framework, while making sure activity is safe and sustainable.
Already this year the government has:
•• worked with industry to introduce a scheme to ensure local communities benefit from
hosting shale gas projects.
Local communities are guaranteed to receive £100,000 for every
fracked well site during the exploration phase and at least 1% of revenue – up to as much as
£10 million over the lifetime of a project – during production
•• published guidance for industry, planning authorities and communities on how shale gas
(and other onshore oil and gas) developments should proceed through the planning
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