George Osborne Serves Tax Break For Oil And Gas Industry, Hopes For Future Investment

More tax breaks designed to bolster investment in North Sea oil and gas were unveiled by George Osborne on Friday.

The Chancellor said income from older fields will be spared from paying full duty to ensure they are fully exploited.

It is the latest in a series of reliefs introduced for the industry, after the coalition Government was criticised for hiking the supplementary charge on North Sea producers from 20% to 32% last year.

The new Brown Field Allowance will shield up to £500 million of income from the charge when firms are boosting production from established oil or gas fields - potentially cutting their tax bill by £160 million.

The tax break should ensure older fields are used to their full potential

The move is expected to cost the Exchequer £100 million per year initially - but officials insist long-term tax revenues will be significantly higher.

Mr Osborne said: "Today's tax allowance is more good news for the North Sea, good news for jobs and good news for the broader economy.

"It will give companies the incentive to get the most out of older fields, creating jobs and delivering more revenue for taxpayers."

Today's announcement could attract at least £2 billion of investment in the short term and is a step towards a potential 50 years of further activity in the North Sea, according to industry body Oil and Gas UK.