The proposals will facilitate the transfer of late life oil and gas assets, with draft legislation to be published in spring 2018 and the government will legislate to make transferable tax histories available from 1 November 2018.

Industry trade body Oil & Gas UK estimates the change in the tax rules to allow these tax credits to pass from owner to owner could stimulate as much as £40bn in new investment and save the Treasury an average of £10m per asset in deferred tax relief.

The Office for Budget Responsibility forecasts tax receipts from the oil and gas sector will total £900m in the 2017/18 financial year. That is down from £12.4bn in 2009.

PwC oil and gas director Mairi Massey said: ‘At the moment owners can claim tax relief for the cost of shutting down wells and clean up though these tax reliefs at present cannot be passed on to a new owner.

‘This change should allow purchasers to obtain tax relief for decommissioning costs when the fields dry up and and help unlock more deals in late life assets in the UK North Sea. As ever, examining the small print will be vital and some of this is contained in the paper published by HM Treasury this afternoon, however we eagerly await draft legislation, which is to be published in Spring 2018.’

Oil and gas taxation: tariff receipts

This measure clarifies that activities by petroleum licence holders in the UK, and on the UK Continental Shelf, which give rise to tariff income, in relation to UK oil and gas assets, are oil extraction activities.

This means profits from these activities are subject to the ring fence corporation tax charge of 30% and the supplementary charge of 10%. It amends the definition of tariff receipts to make it clear that there is no distinction for ring fence or supplementary charge purposes between the treatment of third party income arising from old (PRT) and new (non-PRT) oil fields.

The changes will take effect from 1 January 2018.

Report by Calum Fuller