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HMRC internal manual

Tonnage Tax Manual

Capital allowances: Exit from tonnage tax (P&M)

Qualifying expenditure: Assets other than expensive cars and long life assets

The qualifying expenditure that should go into a company’s capital allowance pool in respect of items of machinery or plant (other than expensive cars and long-life assets) is a percentage of the original cost of the asset.

The percentage varies according to length of time that the company owned the asset before leaving the tonnage tax regime, as follows:

### Length of period of ownership to date of exit ### Percentage of original cost to go into capital allowance pool
Less than or equal to 1 year 75
1 year and one day to 2 years 55
2 years and one day to 3 years 40
3 years and one day to 4 years 30
4 years and one day to 5 years 25
5 years and one day to 6 years 15
6 years and one day to 7 years 12
7 years and one day to 8 years 10
8 years and one day to 9 years 5
More than 9 years Nil


FA00/SCH22/PARA85 (exit: plant & machinery) TTM17466
SI00/2303/REG4 (writing-down basis of plant & machinery) TTM18004
Qualifying expenditure on exit from tonnage tax TTM09300