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The investment allowance is set out in CTA 2010, ss 332A–332KA (Ch 6A) and essentially allows a fixed deduction from a company's adjusted ring fence profits (for the purposes of the supplementary charge). The allowance has been structured by reference to three key principles:

1. Ìý

   •ÌýÌýÌýÌý the allowance is calculated as a set percentage (62.5%) of 'investment expenditure' incurred by a company in relation to a qualifying oil field (ie a field that is not included in a cluster area; see D7.924B¹)

2. Ìý

   •ÌýÌýÌýÌý the allowance generated in respect of a particular field is capable of being used (or 'activated') only to the extent of the revenue from the sale of oil or gas produced from that field in the relevant period; and

3. Ìý

   •ÌýÌýÌýÌý the activated allowance is given as a deduction against the supplementary charge profits of the company

Where a company is entitled to allowances under these provisions, the onshore allowance (D7.924) and the cluster allowance (D7.924B) it may choose the order in which the relieving provisions are to be applied².