OT21570 - Investment Allowance: How allowance is activated
Investment allowance can only be activated when there is income from the relevant oil field. Where there is such income CTA10\S332F provides that the company’s activated allowance is the smaller of:
- The closing balance of unactivated allowance
- The relevant income of the field, or
- (for fields that were before 1 April 2015 additionally developed fields) The relevant activation limit
On 17 January 2019 the Investment Allowance and Cluster Area Allowance (Relevant Income: Tariff Receipts) Regulations 2019 (SI 2019/63) came into force and have effect in relation to tariff receipts of a company in an accounting period beginning on or after 16 September 2016. These regulations meant that certain tariff receipts become relevant income for Investment Allowance purposes (see OT21040).
The closing balance of unactivated allowance is the amount of investment allowance generated in the qualifying oil field in that period and any amount carried forward from an immediately preceding period (CTA10\S332HA).