Taxes Consolidation Act 1997 Schedule 18B paragraph 11

Plant and machinery used partly for purposes of tonnage tax trade

Paragraph 11 of Schedule 18B deals with the capital allowances treatment of machinery or plant that, on a company's entry into tonnage tax, is used partly for the tonnage tax trade and partly for other purposes.

• Where machinery or plant acquired before entry into tonnage tax is used for both tonnage tax and non-tonnage tax purposes, it is treated as two separate assets — one used exclusively for the tonnage tax trade and one used exclusively for other purposes.
• Capital allowances and balancing charges on the non-tonnage tax portion must be determined on a just and reasonable basis, having regard to all relevant circumstances and in particular the extent of use for each purpose.
• The tonnage tax portion is subject to the same balancing adjustment rules under paragraph 10(1)(b) and 10(2)(b) as apply to an asset used wholly and exclusively for the tonnage tax trade.
• The provision ensures that mixed-use assets are not left in a capital allowances limbo on entry to tonnage tax, by requiring each portion to be dealt with under the appropriate regime.