Finance Act 2013

Section 90: Decommissioning Relief: Expenditure on Decommissioning Onshore Installations

Summary

1. Section 90 extends the meaning of ‘general decommissioning expenditure’ for plant and machinery allowances to include onshore assets used for the purposes of offshore oil and gas production. This enables the special allowance which is available for decommissioning expenditure in respect of offshore assets to apply to such onshore assets.

Details of the Section

2. Subsection (1) provides that section 163 Capital Allowances Act (CAA) 2001 is amended by subsections (2), (3) and (4).

3. Subsection (2) amends subsection (1) of section 163 to extend the qualifying conditions for expenditure to be ‘general decommissioning expenditure’.

4. Subsection (3) inserts new subsections (3B) and (3C) into section 163.

5. New subsection (3B) of section 163 requires that the expenditure must have been incurred on decommissioning plant or machinery:

(a)

which has been used for the purposes of a ring fence trade; and,

(b)

which is or forms part of a relevant onshore installation, or when last in use for the purposes of a ring fence trade was or formed part of such an installation.

6. New subsection (3C) of section 163 provides the definition of a ‘relevant onshore installation’.

7. Subsection (4) amends subsection (5) of section 163 to include a definition of ‘oil’.

8. Subsection (5) provides that the changes made by the section have effect in relation to expenditure incurred on decommissioning carried out on or after Royal Assent to Finance Act 2013.

Background

9. The amendments made by this section form part of the Government’s wider package of measures to provide greater certainty in respect of decommissioning tax relief, remove barriers to the transfer of licence interests and increase capacity for additional investment in the UK Continental Shelf.