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Under the general capital allowances rules within the tonnage tax regime, a company's entry into the tonnage tax regime is not a balancing event. A company will not be able to claim capital allowances in respect of expenditure incurred in its tonnage tax business whether before or after its entry into tonnage tax, as a tonnage tax trade is not a qualifying activity.

In addition to not being entitled to claim any annual investment allowances, first year or writing down allowances, a tonnage tax company is not entitled to any balancing allowances on expenditure incurred or any capital allowances in respect of any additional VAT liability incurred in respect of capital expenditure¹. The stated intention of the rules is that when the company leaves the tonnage tax regime, it will be put back broadly in the same position as it would have been in had it remained within the normal corporation tax system throughout².