Legislation – Finance Act 2025

decommissioning expenditure falling within section 330C of CTA 2010 (decommissioning expenditure taken into account in calculating ring fence profits), and

(d)

decommissioning expenditure falling within section 9 (3) of the Energy (Oil and Gas) Profits Levy Act 2022 (meaning of decommissioning costs).

(2)

A payment into a decommissioning fund is qualifying if—

(a)

the relevant transferred plant or machinery to which the payment relates is—

(i)

an eligible CCS installation which qualifies for change of use relief under section 30A of the Energy Act 2008 (change of use relief for certain installations), or

(ii)

an eligible carbon storage network pipeline which qualifies for change of use relief under section 30B of that Act (change of use relief for carbon storage network pipelines), and

(b)

the payment has been certified in an approval notice given under section 30A(5)(b) or 30B(3)(b) of that Act.

(3)

For the purposes of sub-paragraph (2), a payment to a licensed company under an agreement to pay a required amount for the purposes of payment into the decommissioning fund is to be regarded as a payment into that fund.

(4)

But the onward payment into the fund by that licensed company is not a qualifying payment.

(5)

In this Schedule—

“decommissioning fund” is to be interpreted in accordance with section 92 (7)(a) of the Energy Act 2023 (financing costs of decommissioning etc);

“licensed company” means a person who holds a licence under section 7 of the Energy Act 2023 (licences for carbon dioxide transport and storage);

“relevant transferred plant or machinery” is to be construed in accordance with paragraph 2;

“required amount” means an amount determined by the Secretary of State in accordance with regulations made under section 30A (5A)(b) or 30B(3A)(b) (as the case may be) of the Energy Act 2008 (amount required to be paid into a decommissioning fund);

“ring fence trade” means activities which—

(a)

fall within the definition of “oil-related activities” in section 16 (2) of ITTOIA 2005 or section 274 of CTA 2010, and

(b)

constitute a separate trade (whether as a result of section 16 (1) of ITTOIA 2005 or section 279 of CTA 2010 or otherwise);

“tax purposes” means for the purposes of—

(a)

corporation tax (including for the purposes of the supplementary charge in respect of ring fence trades and the energy (oil and gas) profits levy);

(b)

income tax;

(c)

petroleum revenue tax.

3 (1)

Section 164 of CAA 2001 (election for special allowance) has effect in relation to general decommissioning expenditure that is a qualifying payment into a decommissioning fund as if—

(a)

for subsection (1A) there were substituted—

“(1A)

Condition A is that R has made a qualifying payment into a decommissioning fund in the relevant chargeable period.”

(b)

in subsection (3)—

(i)

in paragraph (ab), after “decommissioning” there were inserted “fund”, and

(ii)

paragraphs (ac) and (b) were omitted, and

(c)

subsections (5A) to (7) were omitted.

(2)

Section 165 of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade) has effect in relation to general decommissioning expenditure that is a qualifying payment into a decommissioning fund as if—

(a)

for subsection (1A) there were substituted—

“(1A)

The decommissioning condition is met in relation to a notional accounting period (the “relevant period”) if the former trader has made a qualifying payment into a decommissioning fund in the relevant period.”

(b)

in subsection (2), for paragraph (b) there were substituted—

“(b)

ends with the day on which the trigger event described in section 30A of the Energy Act 2008 (change of use relief for certain installations) occurs in relation to the relevant transferred plant or machinery.”,

(c)

subsections (2A) to (2C) were omitted,

(d)

in subsection (4), in the definition of “relevant decommissioning cost”, “paragraph (a), (b) or (c) of” were omitted,

(e)

subsections (4A) to (4D) and (6) were omitted, and

(f)

in subsection (7), at the appropriate places there were inserted—

““decommissioning fund” and “qualifying payment” are to be construed in accordance with Schedule 3 to FA 2025;”;

“““relevant transferred plant or machinery” is to be construed in accordance with Schedule 3 to FA 2025;”.

Prevention of subsequent allowance where expenditure paid out of qualifying payment

4

No allowance under CAA 2001 is to be made to a person in respect of expenditure paid out of a qualifying payment made into a decommissioning fund where a claim for an allowance in relation to that payment under that Act has been made (whoever made the claim).

Application of the Energy (Oil and Gas) Profits Levy Act 2022

5

Section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 has effect in relation to a company that has transferred relevant transferred plant or machinery to a licensed company as if in subsection (5) (assumptions in determining levy profits or loss), after paragraph (c) there were inserted—

“(ca)

any amount received from a licensed company (within the meaning of Schedule 3 to FA 2025) for relevant transferred plant or machinery (within the meaning of that Schedule) that would otherwise be brought into account when calculating the amount of the profits or loss of any ring fence trade of the company for the period is left out of account,”.

Commencement

6

This Schedule has effect in relation to qualifying payments into a decommissioning fund made on or after the day on which this Act is passed.