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HMRC internal manual

Business Income Manual

Particular trades: fishing

From time to time, Government and EU schemes are run which provide grants to encourage fishing vessels to be decommissioned or temporarily laid up. The tax treatment of such grants is as follows:

Decommissioning grant

A decommissioning grant may be payable when a fishing vessel is permanently broken up or otherwise permanently disabled so that it is incapable of use for any seagoing purposes. In certain cases, the vessel may be transferred to a museum or reassigned for preservation as historical heritage.

If a vessel is scrapped or permanently ceases to be used for the purposes of the trade, the grant is normally treated as a disposal value in the capital allowance computation. See CA23250.

The full amount of the grant normally ranks, in addition to the amount of the sale etc proceeds, as a capital sum within the charge to Capital Gains Tax.

Exceptionally, where the vessel qualifies for a decommissioning grant but continues to be used in the same trade, the grant is taxable as a trading receipt.

Laying-up grant

A laying-up grant represents compensation to the owner for loss of profits for temporarily laying-up a fishing vessel. It is a taxable trading receipt.