Taxes Consolidation Act 1997 section 697N

Chargeable gains

Section 697N provides relief in relation to chargeable gains arising on the disposal of assets used for a company's tonnage tax trade, by restricting the chargeable gain or allowable loss to the proportion of time the asset was not a tonnage tax asset.

• Where part of an asset has been used wholly and exclusively for tonnage tax activities for a continuous period of at least 12 months, and part has not, the tonnage tax portion is treated as a separate asset and any gain or loss on disposal is apportioned on a just and reasonable basis.
• On disposal of a tonnage tax asset, any gain or loss is chargeable or allowable only to the extent it relates to periods when the asset was not a tonnage tax asset, and any such gain or loss is treated as arising outside the company's tonnage tax trade.
• The non-tonnage tax proportion of the gain or loss is calculated using the formula (P − T) / P, where P is the total period since the asset was created or last changed hands in a third-party disposal, and T is the aggregate time during which it was a tonnage tax asset.
• Pre-tonnage tax allowable capital losses that accrued before a company entered tonnage tax remain available for offset against chargeable gains arising on the disposal of a tonnage tax asset.