Building on a pledge contained in the pre-budget report last month, Paymaster General Dawn Primarolo announced on Tuesday the introduction of a new Exploration Expenditure Supplement in a bid to stimulate investment and exploration in the North Sea oil fields.
According to the government, the supplement, which is effective as of the 1st of January 2004, will be available for up to 6 years, at an annual rate of 6 per cent compound interest on unused allowances. This will maintain the value of existing 100 percent allowances for new entrants unable to make immediate use of them.
The government claims that as a result of the supplement, the overall tax relief available to these companies could increase by up to 41 per cent.
Commenting on the new measures, Primarolo observed: "The North Sea oil and gas industry is a vital contributor to the UK economy.
She continued: “The new Exploration Expenditure Supplement will ensure new entrants get support for the important early stages of investment. This builds on the existing 100 per cent first year capital allowances introduced in 2002 for investment in the North Sea and will help to ensure a sustainable future for the UK's oil and gas industry."
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