Guidance

Find out how to pay tonnage tax if you're a shipping company

Understand how you can pay tonnage tax if you manage your ships from the UK and they weigh 100 tons or more.

Overview

Tonnage tax is a form 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.

Qualifying conditions

You may be able to choose to pay tonnage tax if:

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. You’ll not be able to renew your election if you do not renew it within the 10 year period.

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 do not 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.

Excepted years

As long as all other conditions are met, your ship will qualify for tonnage tax if the financial year it’s operated in is an ‘excepted year’. The financial year is from 1 April to 31 March.

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.

If this proportion has not fallen from the year before, HM Treasury may designate that financial year as an ‘excepted year’.

The following are excepted years:

  • 2005
  • 2006
  • 2007
  • 2018

Get help or more information

Read the Tonnage Tax Manual for more information.

You can contact the HMRC tonnage tax technical adviser by:

Large Business
SO663
Newcastle
NE98 1ZZ

Published 13 December 2011
Last updated 23 May 2018 + show all updates
  1. The 'Overview', 'Elect to use tonnage tax' and 'Excepted years' sections have been updated following legislative changes.
  2. Under heading Excepted years, the no years excepted period is now 1 April 2008 to 31 March 2018.
  3. First published.