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HMRC internal manual

Tonnage Tax Manual

Capital allowances: Entry into tonnage tax (P&M)

Apportioning a mixed pool

If a company has previously claimed capital allowances on a mixture of assets, some of which will be taken into its tonnage tax trade and some not, then the expenditure in its capital allowance pools may have to be apportioned, in order to determine the amount to be taken to the tonnage tax (frozen) pool.

The apportionment is on the basis of the market value of all machinery or plant held by the company at the date of entry into tonnage tax in respect of which it has claimed allowances. The proportion of the expenditure in a capital allowance pool, which is to be taken to the frozen pool is expressed as a formula:





  • AV is the market value of the assets from that pool to be used in the company’s tonnage tax trade, and
  • PV is the market value of all the assets held by the company that have been written down in that pool.

A company may need to apportion the written-down value in several different pools (for example, the general pool, and the short-life asset pool). But all the written- down values attributable to the plant and machinery (including cars, and short-life and long-life assets) to be used in its tonnage tax trade go into the single frozen pool.

Use of book value

For some companies, or some kinds of asset, it may be that book value represents a reasonable approximation to market value.  HMRC will accept apportionment on the basis of book value for that company or that kind of asset in such cases, rather than insisting upon market valuations for every asset.  However, where there is likely to be a significant disparity between the two values, apportionment must be on the basis of market value.

In some cases, as for example when the vast majority of assets have gone into tonnage tax and there is a small proportion of non-tonnage tax assets, the issue may not be material, and again an apportionment based on book value will be accepted.


FA00/SCH22/PARA69(3) (proportion taken to tonnage tax pool) TTM17386
Tonnage tax pool TTM09010