Increasing the capital allowance limits for leasing into tonnage tax
This measure is about increasing the limits on capital allowances that lessors of ships can claim on the cost of providing ships for use by ship operators in the tonnage tax regime.
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There are limits placed on the capital allowances lessors can claim on the cost of providing ships for use by operators in the tonnage tax regime. This measure raises the existing ‘first £40 million’ limit and ‘next £40 million’ limit on provision of a ship to £100 million in both instances.
This means that the first £100 million attracts allowances at the normal rate applicable to the asset acquired, depending on whether it is a long life asset or not, and the second £100 million attracts allowances at the special capital allowances rate. Above £200 million provision there are no capital allowances.
Tonnage tax is a form of Corporation Tax calculated on the capacity of ships in the regime, rather than on profits, and is usually beneficial.
Last updated 22 November 2023 + show all updates
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Updated to reflect changes following the Office for Budget Responsibility November 2023 forecast.
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First published.