OT21503 | Corporation tax ring fence: onshore allowance - overview

CTA2010\S356B

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 replaced existing field allowances for all onshore fields whose authorisation day is on or after 5 December 2013 although there were transitional provisions whereby the authorisation day was effectively deferred to 1 January 2015. The deferment of the authorisation day was made by joint election of all licensees in the oil field concerned.

The main features of the allowance are:

1. 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,

2. Elections by a company to transfer allowance between different sites in which it is a licensee (see S356F), and

3. 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).