Tonnage tax — improve of capital allowances leasing limits

Who’s prone to be affected

Those that lease vessels to ship operators elected into the tonnage tax regime.

Basic description of the measure

Capital allowances (allowances instead of depreciation for capital expenditure) can be found to those that purchase and lease property to corporations enterprise a commerce or enterprise. The place the leases are to operators of ships throughout the tonnage tax regime there are limits on the quantity of expenditure that may qualify for these capital allowances. These limits, for what is named ‘leasing into tonnage tax’, haven’t been raised since tonnage tax was launched in 2000. This measure proposes to extend them.

Coverage goal

Tonnage tax is a type of Company Tax geared toward boosting the competitiveness of the UK throughout the worldwide delivery trade. The place property are financed by leases, there may be the chance that the meant profit would possibly partly come up to the suppliers of finance. The boundaries on capital allowances for leasing into tonnage tax are designed to mitigate this danger. The measure proposes to lift them to recognise common worth actions, and adjustments in vessel designs and prices, serving to preserve competitiveness.

Background to the measure

This measure was introduced at Spring Price range 2023.

It follows a assessment into whether or not the present capital allowances restrict claimed by organisations leasing ships to tonnage tax members remained applicable. The assessment was introduced at Autumn Price range 2021 alongside different reforms to Tonnage tax.

Detailed proposal

The will increase in limits will apply to leases into tonnage tax entered into on or after 1 April 2024.

Present regulation

The quantitative restrictions on capital allowances for property leased into tonnage tax are set out at paragraph 94 Schedule 22 FA 2000 (Schedule 22).

Proposed revisions

The ‘first £40 million’ restrict at paragraph 94(3)(a) Schedule 22 is raised to £100 million and the ‘subsequent £40 million’ restrict at paragraph 94(3)(b) Schedule 22 can also be raised to £100 million. The general restrict is subsequently raised to £200 million.

Abstract of impacts

Exchequer affect (£ million)

2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028 2028 to 2029 empty empty empty empty empty empty

The ultimate costing will probably be topic to scrutiny by the Workplace for Price range Duty ( OBR ), and will probably be set out on the subsequent fiscal occasion.

Financial affect

This measure will probably be formally assessed as soon as costings have been licensed by the OBR , however is just not anticipated to have important macroeconomic impacts.

Affect on people, households and households

There may be anticipated to be no affect on people as this measure solely impacts companies.

Equalities impacts

It’s not anticipated that there will probably be impacts on these in teams sharing protected traits.

Affect on enterprise together with civil society organisations

The measure could have a negligible affect on a restricted class of monetary issues who present finance by means of leasing ships to operators throughout the Tonnage tax regime. One-off prices will embrace familiarisation with these adjustments. There usually are not anticipated to be any persevering with prices. The measure total is predicted to don’t have any affect on enterprise’ expertise of coping with HMRC because the change doesn’t have an effect on any processes or tax administration preparations. It’s not anticipated to affect on civil society organisations.

Operational affect (£ million) (HMRC or different)

The HMRC Tonnage Tax Guide will probably be amended. There usually are not anticipated to be every other operational impacts.

Different impacts

Different impacts have been thought-about and none have been recognized.

Monitoring and analysis

The measure will probably be saved underneath assessment via communication with affected taxpayer teams.

Additional recommendation

In case you have any questions on this alteration, please contact Victor Baker, phone: 03000 585490 or electronic mail: