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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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PMA: Ships: Single ship pool

CAA01/S127 - S129

A ship owner has to identify the allowances on a ship in order to postpone them CA25200. They can only be identified if the expenditure is kept out of a pool that contains other expenditure. When a person incurs qualifying expenditure on a ship for the purposes of a qualifying activity the expenditure is put into a single asset pool (the single ship pool). This lets the allowances on the ship be identified so that they can be postponed. No other expenditure is added to the pool. One way of remembering this is to think of each ship as having its own pool.

These are the exceptions to this:

  • Expenditure on a ship provided for leasing may only go into a single ship pool if:

    • the ship is not used for overseas leasing CA24010 other than protected leasing CA24100 during the designated period CA24050, and
    • it appears that the ship will be used for a qualifying purpose CA24110, CA24120 and no other purpose during the designated period CA24050.

      • Expenditure on a ship provided for special leasing CA20040 does not go into a single ship pool.

    The taxpayer may elect to keep all or part of the expenditure on a ship out of a single ship pool. If so the part for which the election is made goes into the pool that it would have gone into if single ship pool treatment had not been available.

    Once the expenditure on a ship is in the single ship pool the shipowner may decide that it would be better to have the expenditure in the pool it would otherwise have gone into. For example, the shipowner may want to set the expenditure in the single ship pool against disposal proceeds in the main pool and avoid a balancing charge. The taxpayer can elect to transfer all or part of the expenditure in the single ship pool to the pool that it would otherwise have gone into. These are the time limits for making the election:

    Income tax - on or before the first anniversary of 31 January, following the year of assessment in which the chargeable period for which the election is made ends.

    Corporation tax - no later than 2 years after the end of the chargeable period for which the election is made.

    Example In the year ended 14 July 2006, Henry has:

    • main pool balance brought forward £5,000,
    • disposal proceeds £20,000, and
    • expenditure in a single ship pool £30,000.

     

    If the disposal proceeds are set against the main pool of £5,000 Henry has a balancing charge of £15,000. He can avoid that balancing charge by electing to transfer £15,000 from the single ship pool to the main pool. He has to make the election by 31 January 2009.