MTT32030 - Calculating top-up amounts: Substance based income exclusion: Eligible tangible asset amount
Source: gov.uk (2025-08-05)


The eligible tangible asset amount of a member for a period is the average of:
- the recorded carrying value of all eligible tangible assets held by the member at the start of the period, and
- the recorded carrying value of all eligible tangible assets held by the member at the end of the period.
Where an entity joins or leaves a group, the eligible tangible asset amount must be apportioned based on the length of the transfer period. See MTT44010 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt44010) for further guidance.

Where an asset is not located in the owner’s territory for more than 50% of the time, the eligible tangible asset amount is reduced (see MTT32050 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32050)).

Meaning of ‘recorded carrying value’

The carrying value must be recorded for the purpose of preparing the consolidated financial statements. Where the value of an asset is not recorded for this purpose, it should not be reflected in the eligible tangible asset amount.

For the purpose of determining the eligible asset amount, ‘carrying value’ means the carrying value of the asset including:
- accumulated depreciation, amortisation or depletion,
- amounts attributable to the capitalisation of eligible payroll costs and costs that would be eligible payroll costs were they not excluded costs (see MTT32020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32020)),
- amounts attributable to any purchase accounting adjustment relating to the asset,
- any impairment loss, and
- so much of the reversal of a previous impairment loss as does not cause the carrying value to exceed the value it would have been, had the impairment loss not been recognised.
However, where the recorded value of an asset has increased solely as the result of a revaluation, that increase is not to be included in the carrying value for this purpose.

Asset not held at beginning and end of period

If a tangible asset is acquired during the period, its carrying value will be zero at the start of the period. If a tangible asset is disposed of during the period, its carrying value will be zero at the end of the period. In this case, its eligible tangible asset amount will be half of the carrying value recorded at the beginning or end of the period.

Where the asset is acquired and disposed of in the period, but is not held at either at the beginning or the end of the period, its value is not included in the eligible tangible asset amount.

Example

A member of a group has two eligible tangible assets at the beginning of the group’s accounting period.

Asset A does not have a value recorded in the consolidated financial statements but has an estimated value of £4,000. Asset B has a value of £10,000 recorded in the balance sheet of the consolidated financial statements. It is sold before the end of the period.

The eligible tangible asset amount will be (£10,000 + £0 / 2) = £5000.

Asset A is not reflected in the figure because its value is not recorded.

Asset B is only reflected in the figure for assets held at the start of the period, because it was disposed of and is no longer held by the member at the end of the period.

Eligible tangible assets

Assets falling in the following categories are eligible tangible assets:
- property, plant and equipment located in the member’s territory.
- natural resources located in that territory.
- a right to use a tangible asset located in that territory under a lease (but see MTT32060 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32060) in relation to certain operating leases and dual use assets).
- a license or similar right to use a tangible asset located in that territory, provided that:
- the right is granted by a government of that territory, and
- it is expected that, in the granting of that right, the member will, in using that right, incur significant expenditure in enhancing the value of tangible assets in that territory (whether or not those assets are themselves subject to the right).
The following types of assets are excluded from being eligible:
- property (including land or buildings) held for sale, lease or investment, regardless of when such sale, lease or investment is carried out.
- assets used in the course of core or ancillary international shipping activity (see MTT32070 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt32070)).
Amendment in Finance Act 2025

Section 197 was amended by FA25. This guidance page reflects the current version of the legislation. Consult FA25 for legislation applicable to prior periods if the retrospection election does not apply (see MTT09490 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09490)).