Taxes Consolidation Act 1997 Schedule 18B paragraph 19

Exit: plant and machinery

Paragraph 19 of Schedule 18B sets out how capital allowances are dealt with when a company leaves tonnage tax, both for machinery or plant acquired during the tonnage tax period and for assets brought into the regime at entry.

• Assets acquired during tonnage tax leave the regime at the lower of actual cost or open market value at the date of exit.
• The deemed cost is treated as expenditure incurred on the day after the company exits tonnage tax, for the purposes of making capital allowances going forward.
• Capital allowances that were frozen on entry to tonnage tax (under section 697O) become available to the company once it leaves the regime, as if it had never been subject to tonnage tax.
• Wear and tear allowances recovered under this rule cannot exceed the total cost of the asset (including renewal, improvement or reinstatement expenditure) and the annual allowance cannot exceed 20 per cent.