TTM10410 - 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 6 per cent as ordinarily ships would be assessed as long life assets acquired with special rate expenditure, see CAA01/S104A (1)(c) and S104D (1)), on the first £40 million of expenditure, and at 6 per cent on the second £40 million, see FA00/SCH22/PARA94 (3)(b), which also applies the CAA01/S104D (1) rate.
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 (the normal rate specified at CAA01/S56 (1), see FAA00/SCH22/PARA94 (3A)(a));
- Writing-down allowance of 6 per cent a year (the rate specified by CAA01/S104D) on the next £40 million;
- No allowances on any excess over £80 million.
These limits apply separately to each ship, FA00/SCH22/PARA95 (1).
Historic rates were as follows:
Expenditure incurred | Writing-down allowance on first £40m | Writing -down allowance on next £40m | Writing-down allowance on any excess over £80m |
---|---|---|---|
Before 1 April 2012 | Nil | Nil | Nil |
1 April 2012 to 31 March 2019 | 18% | 8% | 8% |
From 1 April 2019 | 18% | 6% | 6% |
Hybrid rate
Where a business’s chargeable period spans the date the WDA rate is changed, a hybrid rate is used to calcuate the rate of WDA for that transitional period - see CA23220 for more details on how to calculate the WDA rates for such periods.
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.
References
FA00/SCH22/PARA94 (quantitative restrictions on allowances) | TTM17546 |
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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 |