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HMRC internal manual

Tonnage Tax Manual

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HM Revenue & Customs
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Capital allowances: During tonnage tax (P&M)

Change of use of tonnage tax asset: Asset acquired after entry

If there is a change of use of a tonnage tax asset which was acquired after entry into Tonnage Tax, then none of the expenditure relating to that asset will be in the tonnage tax pool. In fact, the company will have claimed no capital allowances at all in respect of that asset.

CAA01/S13 is therefore applied for the purposes of computing capital allowances available in the non-tonnage tax trade (seeCA23030 onwards). For this purpose reference to the ‘trade’ does not include a reference to the tonnage tax trade. The tonnage tax trade is treated as a previous use that has not been taken into account in computing any capital allowances.

The company will therefore be treated as if it had acquired the asset for an amount equal to the market value at the date that the change took place.
 

  • If, after the change of use, the asset is used wholly for the purposes of a non-tonnage tax trade, then capital allowances will be due in the normal way.
  • If, after the change of use, the asset is used partly for the purposes of the tonnage tax trade, and partly for a non-tonnage tax trade, then capital allowances will be due in respect of the use in the non-tonnage tax trade, (see TTM09100).

References:

FA00/SCH22/PARA75(3) (change of use of tonnage tax asset) TTM17416