Corporation Tax Act 2010 section 346

Reduction of field allowance if equity disposed of

Section 346 provides the calculation for the remaining field allowance available to a company after it has disposed of some of its equity interest in a new oil field.

• When a company (the transferor) disposes of part of its equity interest in a qualifying new oil field, the field allowance must be reduced accordingly.
• The reduction is calculated by reference to the proportion of equity interest that has been disposed of relative to the transferor's holding immediately before the disposal.
• The remaining field allowance after the disposal equals the original allowance minus the amount attributable to the equity share that was transferred away.
• This mechanism ensures that the tax relief associated with a new oil field follows the equity interest, so that a company retaining only a partial stake does not continue to benefit from the full allowance.