TTM10400 | Ship leasing: Quantitative restrictions on allowances

Outline

There are restrictions on the availability of capital allowances to a lessor who incurs capital expenditure on the provision of a ship to be used by a tonnage tax company. The purpose of these restrictions is to limit the cost to the Exchequer of capital allowances on qualifying ships that, if they were owned directly by tonnage tax companies, would not be eligible for capital allowances at all.

The restrictions operate to limit both:

• the amount of expenditure qualifying for capital allowances, and

• the rate at which allowances are available.

See TTM10410 for details.

Power to alter amounts

FA00/SCH22/PARA101 gives HMRC the power to alter by regulations the quantitative restrictions on allowances, which are specified in FA00/SCH22/PARA94 (3).

Leases excluded from restrictions

FA00/SCH22/PARA102 excludes leases entered into on or before 23 December 1999 from the restrictions.