TTM09140 - Capital Allowances: During Tonnage Tax (P&M)

Change of use of non-tonnage tax asset

Asset begins to be used wholly for tonnage tax trade

Where plant and machinery used by a tonnage tax company for non-tonnage tax activities begins to be used wholly for the purposes of its tonnage tax trade:

• the provisions of CAA01/S61(1)(e) (previously CAA90/S24(6)(iv)) apply, so that
• a disposal value is brought into account in the general pool (or other pool as appropriate) of the non-tonnage tax trade,
• the company is treated as having acquired the asset at its disposal value,
• the disposal value will be market value , per table in CAA01/S61(2) (previously CAA90/S26(1)(f)), and
• there is no effect on the tonnage tax (frozen) pool.

Asset begins to be used partly for tonnage tax trade

Where plant and machinery used by a tonnage tax company for non-tonnage tax activities begins to be used partly for the purposes of its tonnage tax trade:

• the provisions of CAA01/S61(1)(e) (previously CAA90/S24(6)(iv)) and CAA01/S206 to 207 apply, so that
• a disposal value is brought into account in the capital allowance computation,
• a pool for a notional trade is created using that disposal value,
• the disposal value will be market value , per table in CAA01/S61(2) (previously CAA90/S26(1)(f)),
• any subsequent writing down allowance given, or balancing charge, on the notional trade pool is reduced in proportion to its tonnage tax use, and
• there is no effect on the frozen pool.

References