TTM03690 - Qualifying companies and ships: Dredgers
Definition
There is no statutory definition of a ‘dredger’, which therefore has its ordinary English meaning. A dredger is a vessel specifically constructed or converted for lifting material from the seabed. This may be by means of hoppers, suction or other mechanical devices.
The use of dredgers falls into two broad types: for maintenance of navigation by dredging channels, and for dredging up sand and aggregate from the seabed for use by the construction industry and in land reclamation.
For periods up to 30 June 2005, all dredgers were excluded from tonnage tax. For subsequent periods up to 31 March 2022 flagging rules consistent with the EU maritime state aid guidelines applied. These were repealed by FA22/S25 (7).
Qualifying dredgers
The definition of qualifying dredgers is at FA00/SCH22/PARA20A.
To qualify for tonnage tax a dredger has to:
- be self propelled,
- be constructed, or adapted for the carriage of cargo, and
- spend at least 50 per cent of its operational time carrying goods at sea.
The type of dredger that may qualify for tonnage tax is an aggregate dredger, which dredges sand or gravel from the sea-bed and carries it to port for resale or use in the construction industry; this is the carriage of cargo. Dredgers that maintain navigable waterways, or are used in preparatory work for construction, where the dredged material is then dumped in a different location, are not qualifying dredgers.
Operational time will include travelling to the dredge site, winning the dredged material and transport back to unload. The dredge site must be at sea (see TTM03610).
Non-qualifying dredger
All non qualifying dredgers are excluded vessels. Profits from operating these vessels are taxed under the normal rules of Corporation Tax.
References
| FA00/SCH22/PARA20 (1)(f) (dredgers) | TTM17106 |
|---|---|
| FA00/SCH22/PARA20A (Qualifying dredgers and tugs) | TTM17111 |
| FA00/SCH22/PARA22D, PARA20E and PARA20F | TTM17141 |
| Excluded vessels | TTM03620 |
| Need to consider end-user of chartered ship | TTM03675 |