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HMRC internal manual

Capital Allowances Manual

PMA: Ships: Postponement of FYAs and WDAs

CAA01/S130 & S131

A person who is entitled to a FYA or a WDA for a chargeable period may give a notice to postpone all or part of that allowance. The notice must be given within these time limits:

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.

The notice must specify the amount postponed.

When an allowance is postponed for a chargeable period it is not made for that chargeable period but allowances for future chargeable periods are calculated as if it had been made so that future allowances are calculated by reference to the reduced pool balance.

Once all or part of an allowance has been postponed the person who postponed it may claim all or part of the amount postponed in a future chargeable period provided that the person is still carrying on the qualifying activity. A postponed allowance may not be claimed after the qualifying activity for which the ship was acquired has ceased. When a postponed allowance is claimed it is made as well as any other WDA claimed for the chargeable period. A postponed allowance is not treated as an allowance brought forward for the purposes of the group relief legislation in CTA10/S101 (formerlyICTA88/S403ZB.)

Example The Pilgrims partnership buys the Mayflower for £1,000,000 on 4 July 2010 to use in their qualifying activity. They draw up accounts to 31 December each year. They claim the WDA of £200,000 (= 20% of £1,000,000) for the year ended 31 December 2010 but postpone £150,000 of it. The pool carried forward at 31 December 2003 is £800,000 (qualifying expenditure £1,000,000 less WDA claimed £200,000). They can claim all or part of that £150,000 postponed in any year in which they still carry on the qualifying activity in addition to the WDA claimed for the year.