Chancellor George Osborne confirmed the 30 per cent supplementary tax charge on North Sea profits would be cut to 20 per cent, and back dated to the start of the year.
In his hour long speech the chancellor said that falling oil prices are a “pressing danger” to the future of the North Sea oil and gas industry and that he is taking “bold and immediate action”.
He also set out plans to cut the Petroleum Revenue Tax from 50 per cent to 35 per cent “to support continued production in older fields”.
The Budget also outlined plans from the start of next month for “a single, simple and generous tax allowance to stimulate investment at all stages of the industry” and for government investment in new seismic surveys in “under-explored areas in the UK Continental Shelf”.
The chancellor said these tax breaks and support measures “will boost expected North Sea oil production by 15 per cent by the end of the decade”.
This move will be welcomed by utility giant Centrica which is the largest single player in the offshore oil and gas industry and has seen its share prices and profits tumble over the last year on the back of record low oil prices of less than $50 per barrel in January.
Osborne took the opportunity of announcing the tax cuts to attack the SNP, saying “it goes without saying that an independent Scotland would never have been able to afford such a package of support”.