TTM10460 - Ship Leasing: Quantitative restrictions on allowances
Disposals: Example
A large ro-ro ship is acquired for £100m on 1 January 2004 by cross-Channel operator, Victory Ferries Ltd, by way of a lease from their bank. Victory Ferries Ltd has elected for Tonnage Tax with effect from 1 January 2000.
The bank's leasing subsidiary, Firth Ship Leasing Ltd, claims capital allowances for the year ended 31/12/2004 and for year ended 31/12/2005.
The ship is sold by Victory Ferries Ltd, as agent for Firth Ship Leasing Ltd, for £80m on 1/5/2006.
The capital allowances available to Firth Ship Leasing Ltd are as follows (amounts in £’000s):
Accounting period ended 31 December 2004
|
|
25% pool |
10% pool |
Non-qualifying |
Total allowances |
||||
|
Cost (100,000) |
40,000 |
|
40,000 |
|
20,000 |
|
|
|
|
WDA |
10,000 |
|
4,000 |
|
|
|
14,000 |
|
|
Balance c/fwd |
30,000 |
|
36,000 |
|
|
|
|
|
Accounting period ended 31 December 2005
|
|
25% pool |
10% pool |
Non-qualifying |
Total allowances |
||||
|
Balance b/fwd |
30,000 |
|
36,000 |
|
20,000 |
|
|
|
|
WDA |
7,500 |
|
3,600 |
|
|
|
11,100 |
|
|
Balance c/fwd |
22,500 |
|
32,400 |
|
|
|
|
|
Accounting period ended 31 December 2006
|
|
25% pool |
10% pool |
Non-qualifying |
Total allowances |
||||
|
Balance b/fwd |
22,500 |
|
32,400 |
|
20,000 |
|
|
|
|
Sold (80,000) |
(32,000) |
|
(32,000) |
|
(16,000) |
|
|
|
|
Balance |
(9,500) |
|
400 |
|
4,000 |
|
|
|
|
Excess transferred from 25% pool |
|
|
(9,500) |
|
|
|
|
|
|
BC |
|
|
(9,100) |
|
|
|
(9,100) |
|
Summary
Net allowances given: £16,000
Net cost to lessor: £20,000
References
|
Treatment of disposal proceeds |
