Finance Bill — Clause 7 — Increase Tax Rate For Companies Producing Oil and Gas from 20% to 32% — 3 May 2011 at 26:55

The majority of MPs voted to increase the tax rate applying to companies producing oil and gas in the UK and on the UK Continental Shelf from 20% to 32%.

MPs were considering the Finance Bill^[1]. The majority of MPs voted for Clause 7^[2] as amended to stand part of the Bill.

The approved clause 7, titled Increase in rate of supplementary charge. The explanatory notes to the Bill^[3] explain the tax in question:

• Supplementary charge was introduced in 2002 and applies to companies producing oil and gas in the UK or on the UK Continental Shelf. Special tax rules apply to such companies. A ‘ring fence’ is placed around their profits and the normal rules that allow those profits to be reduced by losses from other activities carried on by the company or from losses arising to other companies in the same group are disapplied. The rules work by treating ring fenced activities as a separate trade
• The supplementary charge is applied to adjusted ring fence profits. These are defined as the amount of profit (or loss) arising from any ring fence trade less any financing costs.
• The rate of supplementary charge when introduced was 10 per cent and for accounting periods beginning on or after 1 January 2006 is 20 per cent

Clause 7 of the Finance Bill provided for an increase in the rate to 32 per cent

• [1] Parliament's webpage on the Finance Bill 2011 (now an Act)
• [2] Clause 7 of the Finance Bill
• [3] Explanatory notes to the Finance Bill

Debate in Parliament | Source |