Taxation of Chargeable Gains Act 1992 section 198E

Ring fence reinvestments and disposal consideration

Section 198E defines what qualifies as a "ring fence reinvestment" for oil industry capital gains tax purposes and sets out how disposal consideration is determined in certain licence disposal cases.

• A ring fence reinvestment requires the disposal to be either a material disposal or a disposal of a UK licence relating to an undeveloped area, with the old assets used solely in the company's ring fence trade
• The replacement assets must be oil assets taken into use solely for the company's own ring fence trade or that of another company in the same group
• Where certain licence disposals involve mixed consideration, only the non-licence element of the consideration is taken into account for the reinvestment rules
• Oil assets are broadly defined to include interests in oil fields, seabed structures, assets used in oil extraction, treatment, storage or transportation, and UK licences for undeveloped areas