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HMRC internal manual

Tonnage Tax Manual

Qualifying companies and ships: Qualifying ship


A ship is any vessel used in navigation. Navigation is the art or science of conducting a ship from one point to another. The phrase ‘used in navigation’ conveys the concept of transporting passengers or goods by water to an intended destination. Navigation is not synonymous with movement on water; navigation is planned and orderly movement from one place to another. To be used in navigation the vessel has to have its own means of propulsion and direction which is used to move it from one place to another.

The view that the vessel must have its own means of propulsion has now been withdrawn.  See Global Marine Drilling Company v Triton Holdings Ltd *[1999] ScotCS 277, applying an old authority *The Mac (1882) 7 PD 126 (where the Court of Appeal overturned the decision of Phillimore J).

A ship will not be a qualifying ship unless it satisfies all of the following conditions:

* It is ‘seagoing’. See TTM03510 for the meaning of ‘seagoing’. The normal commercial operations of the ship must be undertaken at sea for the ship to be a qualifying ship.
* It is of 100 tons or more gross tonnage and it has either a valid International Tonnage certificate (1969) or a valid certificate recording its tonnage as measured in accordance with domestic tonnage regulations. See TTM01330 for details of how tonnage is to be measured and the tonnage certificates required.
* It is used for one or more of the following:  
* Carriage of passengers by sea See TTM03545
* Carriage of cargo by sea See TTM03550
* Towage, salvage or other marine assistance carried out at sea - See TTM03560
* Transport in connection with other services of a kind necessarily provided at sea - See TTM03570
* It is not used for the provision of goods or services of a kind normally provided on land. See TTM03610
* It is not the type of vessel excluded from being qualifying ships. See TTM03620

See TTM03595 for further guidance on the meaning of ‘sea’.

First qualifying

For when a new ship first becomes a qualifying ship, see TTM03580

Ceasing to qualify

For when a ship ceases to be qualifying, see TTM03590

Special rules for offshore activities

See TTM11001 onwards, for special rules applying to vessels engaged in ‘offshore activities’ (e.g. in the North Sea oil and gas industries).

End user of ship

There is a need to consider the end user of a chartered ship in considering whether the activities qualify; see TTM03675


FA00/SCH22/PARA19 (qualifying ships) TTM17101
Examples of qualifying and non-qualifying ships TTM03695