Give oil last shot in arm, urges Deloitte

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That is the advice from industry tax experts at accountants Deloitte who believe the Chancellor could be ready to act after years of promises and consultations.

"In a world where the UK oil output is in decline we need to make the most of the remaining resources available," said Deloitte partner Julian Small.

"If the Budget gives oil and gas companies the fiscal incentives to target these hard-to-get resources in particularly small and more challenging oil fields, it will be of benefit for the industry.

"If these more challenging and difficult oilfields are taxed at a lower rate, there is more chance of a return and it will make them more attractive to exploit.

"This Budget could eventually result in more field developments, when it becomes more profitable for companies to do so."

Explorers are taxed at a rate of 50% - before corporation tax - on revenue. Deloitte believes Darling will go ahead with a new "value allowance" which will lower the tax rate on smaller fields.