Tonnage tax: shipping companies
How you can pay Corporation Tax if you manage your ships from the UK and they weigh 100 tons or more.
Tonnage tax can be used instead of Corporation Tax for working out the tax you owe on your profits.
You can choose to pay tonnage tax on a fixed notional profit, instead of your actual profits from your shipping activities. This is based on the net tonnage of your ships.
You may be able to choose to pay tonnage tax if:
- you’re a qualifying company
- you have qualifying ships
- you meet certain obligations to train seafarers
Elect to use tonnage tax
You can elect to use tonnage tax but you must sign up for a minimum of 10 years.
You can make a renewal election on a rolling basis to extend the original election.
Ships registered outside the European Union (EU) or European Economic Area (EEA) member states
If you start to operate a qualifying ship after electing into tonnage tax, you must carry out a flagging test to decide if your ship qualifies.
You don’t need to carry out the flagging test if the financial year is excepted.
You must always register tugs and dredgers in an EU or EEA member state to qualify for tonnage tax.
Providing all other conditions are met your ship will qualify for tonnage tax if the financial year it’s operated in is an ‘excepted year’.
HM Revenue and Customs (HMRC) will test the tonnage of ships, registered with EU or EEA member states for tonnage tax, as a proportion of tonnage tax ships registered worldwide.
As long as this proportion hasn’t fallen from the year before, HM Treasury will designate that financial year as an ‘excepted year’.
The financial years 2005, 2006 and 2007 are excepted years.
No years from 1 April 2008 to 31 March 2018 have been excepted.
You can find more information in the Tonnage Tax Manual.
You can contact the HMRC tonnage tax technical adviser:
Telephone: 03000 568532