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|