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From time to time, Government schemes are run which provide grants to encourage fishing vessels to be decommissioned or temporarily laid up. »Ê¹ÚÌåÓýapp tax treatment of such grants is as follows:

Decommissioning grant

A decommissioning grant may be payable when a fishing vessel is permanently broken up or otherwise permanently disabled so that it is incapable of use for any seagoing purposes. In certain cases, the vessel may be transferred to a museum or reassigned for preservation as historical heritage.

If a vessel is scrapped or permanently ceases to be used for the purposes of the trade, the grant is normally treated as a disposal value in the capital allowance computation. See CA23250.

»Ê¹ÚÌåÓýapp full amount of the grant normally ranks, in addition to the amount of the sale etc proceeds, as a capital sum within the charge to Capital Gains Tax.

Exceptionally, where the vessel qualifies for a decommissioning grant but continues to be used in the same trade, the grant is taxable as a trading receipt.

Laying-up grant

A laying-up grant represents compensation to the owner for loss of profits for temporarily laying-up a fishing vessel. It is a taxable trading receipt.