Bareboat leasing legislation will exacerbate parlous state of UKCS exploration
19 March 2014
Colin Pearson, tax partner at EY in Aberdeen, comments on the restriction on tax deductions for bareboat leasing costs announced in today’s (Wednesday 19 March) Budget
“The confirmation that the Chancellor is to proceed with the legislation previously announced in the Autumn Statement to impose restriction on tax deductions for bareboat leasing costs is bad news for the UK oil & gas sector. With a tight rig market and cost pressures already acute, any additional costs will undoubtedly have an adverse impact on activity.
“The recent Oil & Gas UK Activity Survey highlighted the parlous state of exploration in the sector, a problem that is likely to be exacerbated by this change. EY estimates that this tax change will add as much as £175 million of cost per annum into the sector.
“Add in the additional National Insurance Contribution (NIC) costs associated with the Offshore Employment Intermediary legislation and this is unwelcome news.”
For more information on the 2014 Budget, visit the EY 2014 Budget page.