Corporation Tax Act 2010 section 356JF

Generation of cluster area allowance

Section 356JF explains how a company holding a licence in a cluster area generates a cluster area allowance equal to 62.5% of its relievable investment expenditure on oil-related activities incurred on or after 3 December 2014.

• A company that is a licensee in a licensed area wholly or partly within a cluster area, and that incurs relievable investment expenditure on or after 3 December 2014 in relation to that cluster area, holds a cluster area allowance equal to 62.5% of that expenditure.
• Investment expenditure is only "relievable" to the extent it is incurred for the purposes of oil-related activities; expenditure on acquiring an asset may be excluded from relief in certain circumstances.
• The cluster area allowance is treated as "generated" at the time the investment expenditure is incurred, by the company concerned and in the relevant cluster area.
• Where expenditure is only partly for oil-related activities or only partly relates to a particular cluster area, it must be apportioned to the relevant activities or area on a just and reasonable basis.