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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Chargeable Gains: Time apportionment


The proportion of the gain or loss (arising on the disposal of a tonnage tax asset) which is to be brought into account for tax purposes is given by the formula:

(P - PTTA) ÷ P

This formula is applied to the whole of the relevant chargeable gain or allowable loss (calculated using the normal CGT rules) before taking account of any capital losses brought forward or claims to rollover relief.

Definition of P

P is the total length of the period between:

  • the time the asset was created, (or the date of the last third party disposal), and
  • the date of the disposal giving rise to the gain or loss.

For this purpose, a ‘third party disposal’ means a disposal, or deemed disposal, that is not treated as a no gain/no loss disposal. This will include an intra-group transfer to which the no gain/no loss provisions did not apply (e.g. following a transfer from trading stock).

What this means is that P runs from the later of:

  • the date that the asset was created, or
  • the date that the asset was acquired from a third party (since there will have been a ‘third party disposal’ by the third party from whom the asset was acquired on that date), or
  • the last date on which there was an intra-group transfer to which the no gain/no loss provisions did not apply

In practice, the period P will normally be the whole of the period during which the group of which the company making the disposal is a member owned the asset.

Definition of PTTA

PTTA is the length of the period (or the aggregate length of the periods) during which the asset was a tonnage tax asset, but excluding any periods prior to the start of period P.

In practice, PTTA will normally include all the periods when the asset was used by the company, or by any other company in the same group, as a tonnage tax asset.


An example is given at TTM08230.


FA00/SCH22/PARA65 (disposal of tonnage tax asset) TTM17366