Taxes Consolidation Act 1997 section 697O

Capital allowances: general

Section 697O provides that a tonnage tax trade is not treated as a trade for the purposes of capital allowances, and sets out related restrictions on lessors and the application of Schedule 18B.

• A company's tonnage tax trade is excluded from being a trade for capital allowance purposes, so no capital allowances arise on assets used in that trade, but balancing charges may still be made.
• An individual who leases machinery or plant to a company for use in a tonnage tax trade is not entitled to capital allowances on that machinery or plant.
• Part 3 of Schedule 18B applies to adapt the capital allowance rules for tonnage tax trades.
• The restriction on capital allowances applies for the duration of the asset's use in the tonnage tax trade, but does not prevent balancing charges where appropriate.