Example
A company enters the tonnage tax regime on 1 January 2001
Its capital allowance computation as at 1 January 2001/31 December 2000 shows:
Description |
- |
Additional information |
WDV general pool |
160000 |
(comprising safety standby ship A, MV 140,000, and office equipment MV 5,000) |
WDV single ship pool |
02/12/2652 |
(diving support vessel, ship B) |
Free depreciation on B |
55000 |
- |
During the accounting period year ended 31 December 2001 it purchases two further ships:
Date |
Cost |
Amount |
Additional informtion |
04/01/2001 |
Cost |
4000000 |
(diving support vessel, ship C) |
10/01/2001 |
Cost |
500000 |
(safety standby ship D) |
During the AP ended 31 December 2001 the vessels are operated:
Ship |
UK Sector of North Sea |
Days |
Outside UK territorial waters |
Days |
A |
1/1/2001 – 31/12/2001 |
365 |
- |
- |
B |
- |
- |
1/1/2001 – 31/12/2001 |
365 |
C |
- |
- |
1/4/2001 – 31/12/2001 |
275 |
D |
1/10/2001 – 31/12/2001 |
92 |
- |
- |
Total days |
- |
457 |
- |
640 |
During the AP ended 31 December 2002 the vessels are operated:
Ship |
UK Sector of North Sea |
Days |
Outside UK territorial waters |
Days |
A |
1/1/2002 – 31/12/2002 |
365 |
- |
- |
B |
1/3/2002 – 30/9/2002 |
214 |
1/1/2002 – 28/2/2002, 1/10/2002 – 31/12/2002 |
59, 92, 151 |
C |
1/4/2002 – 31/12/2002 |
275 |
1/1/2002 – 31/3/2002 |
90 |
D |
1/1/2002 – 31/12/2002 |
365 |
- |
- |
Total days |
- |
1219 |
- |
241 |
The office equipment is used generally to support all vessels.
To calculate unrelieved qualifying expenditure:
Ship A
Already in use for 'offshore activities' on entering tonnage tax.
Description |
Amount |
Calculation |
Amount |
Equals |
Amount |
Apportion pool |
160000 |
x |
140000 |
= |
154,483 |
- |
- |
- |
145000 |
- |
- |
Office equipment
Already partly in use for 'offshore activities' on entering tonnage tax.
Description |
Amount |
Calculation |
Amount |
Equals |
Amount |
Apportion pool |
160000 |
x |
5000 |
= |
5,517 |
- |
- |
- |
145000 |
- |
- |
Ship B
Already in use, but outside UK waters, on entry into tonnage tax.
Moves into UK Sector on 1/3/2002
Notional qualifying expenditure is as if brought into use immediately
Description |
Amount |
Equals |
Total |
Single ship pool WDV |
275000 |
- |
- |
plus free depreciation |
55000 |
= |
330000 |
It is then written down in accordance with SI00/2303/REG7 and REG4 table
Description |
Amount |
Notional qualifying expenditure on 1/1/2001 |
330000 |
Percentage to be used per REG4 table as at beginning of AP commencing 1/1/2002 (1 year or less) |
0.75 |
Balance of qualifying expenditure as at 1/1/2002 |
247500 |
Ship C
Purchased after entering tonnage tax, but used outside UK waters for first 10 months
Description |
Amount |
Notional qualifying expenditure is cost |
4000000 |
It is then written down in accordance with REG7 and the REG4 table; that is, cost as at 1/4/2001 |
4000000 |
Description |
Amount |
Percentage to be used per REG4 table as at beginning of AP commencing 1/1/2002 (1 year or less) |
0.75 |
Balance of qualifying expenditure as at 1/1/2002 |
3,000,000 |
Ship D
Description |
Amount |
Brought into use in UK waters immediately so notional qualifying expenditure as at 1/10/2001 is cost |
500000 |
Capital Allowance Computation for AP YE 31/12/2001
Description |
Ship A |
Ship B |
Ship C |
Ship D |
**Office Equipment |
Amount |
NQE |
154483 |
- |
- |
500000 |
5517 |
- |
25% WDA |
38621 |
- |
- |
125000 |
1379 |
- |
Offshore |
365 |
- |
- |
365 |
457 |
- |
fraction |
365 |
- |
- |
365 |
1097 |
- |
CA given |
38621 |
- |
- |
125000 |
575 |
164196 |
WDV c/fwd |
115862 |
- |
- |
375000 |
4138 |
- |
Capital Allowance Computation for AP YE 31/12/2002
Description |
Ship A |
Ship B |
Ship C |
Ship D |
**Office Equipment |
Amount |
NQE/WDV |
115862 |
247500 |
3000000 |
375000 |
5517 |
- |
25% WDA |
28966 |
61875 |
750000 |
93750 |
1379 |
- |
Offshore fraction |
365/365 |
214, 365 |
275, 365 |
365, 365 |
1,219, 1,460 |
- |
CA given |
28966 |
36278 |
565069 |
93750 |
1152 |
725,215 |
WDV c/fwd |
86896 |
185625 |
2250000 |
281250 |
4810 |
- |
** The calculation for the office equipment, based on the number of ship-days offshore and in tonnage tax, is suggested for such mixed use as providing a 'just and reasonable' result, see TTM09040.
References
References |
Link |
Outline of capital allowance code for offshore activities |
TTM11300 |
Notional qualifying expenditure on existing assets |
TTM11310 |
Notional qualifying expenditure on new assets |
TTM11320 |
Proportionate reduction of allowances |
TTM11330 |