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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Ship leasing: Quantitative restrictions on allowances

Entitlement to allowances

For expenditure incurred on or after 1 January 2011, a lessor will be able to claim writing down allowances at the applicable rate (most likely to be 8 per cent as ordinarily ships would be assessed as long life assets), on the first £40 million of expenditure, and at 8 per cent on the second £40 million.

With effect from 1 April 2012, the applicable rate for a ship that is not a long life asset is as follows: No first year allowances

  • Writing-down allowance of 18 per cent a year on the first £40 million
  • Writing-down allowance of 8 per cent a year on the next £40 million
  • No allowances on any excess over £80 million

These limits apply separately to each ship, FA00/SCH22/PARA95 (1).

Separate class pools

The expenditure that does qualify for allowances should be taken to separate 18 per cent and 8 per cent class pools.  Expenditure on each qualifying ship should be allocated to the 18 per cent class pool, or the 8 per cent class pool, as appropriate.


FA00/SCH22/PARA94 (quantitative restrictions on allowances) TTM17546
FA00/SCH22/PARA95(1) (limits apply to cost of each ship) TTM17551
Quantitative restrictions on allowances TTM10400
Shared expenditure on ship TTM10420
Cost of providing ship TTM10430
Example of cost of providing ship and the quantitative restrictions TTM10440