Derrick Parkes, Energy Tax Partner at KPMG comments on the oil tax reforms in this year’s Budget:

???UK oil companies will be pleased that the Chancellor resisted the urge to increase tax rates on their profits despite very high oil prices.

???But the Government has stopped the offset of investment management costs against UK oil and gas profits. In doing so the Chancellor expects to raise an additional ??150m per year.

???At the same time, long-life assets will now qualify for 100 per cent ???first year??™ allowances (up from 24 per cent) as will mid-field life decommissioning costs. There are further technical changes including a fairer system for tax deductions for the costs of abandoning North Sea fields and the possible opting out of fields that will not pay Petroleum Revenue Tax.???

“Overall, these reforms increase tax overall whilst bringing some welcome relief”