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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Relevant shipping profits: Exclusion of investment income

Making investments is not a tonnage tax activity.

In particular:

  • income from investments is not relevant shipping income, and
  • to the extent that an activity gives rise to ‘income from investments’ (see below) it is not regarded as part of a company’s tonnage tax activities



The only exceptions to this general rule are:

  • dividends from overseas shipping companies, if certain conditions are satisfied, (see TTM06400).
  • certain interest etc, which would fall to be treated as trading income under the normal corporation tax rules, (see TTM06510).

‘Income from investments’

For this purpose ‘income from investments’ includes:

  • any income chargeable to tax under Schedule A or Case III of Schedule D, and
  • any income chargeable under Case V of Schedule D that

    • consists in income of an overseas property business, or
    • is equivalent to income chargeable to tax under Case III of Schedule D, but which arises from a possession outside the United Kingdom.

Intra-group loans (inter-company loans)

It follows from the above, that interest on an intra-group loan will not normally be relevant shipping income. Interest on such loans will therefore be assessable outside the ring fence.

Furthermore, if an intra-group loan is made to a tonnage tax company in circumstances such that the interest payable would fall to be allowed as a deduction in computing the relevant shipping profits of the borrower, the transfer pricing rules (as described in TTM07400) will apply. But see TTM07500on interaction of transfer pricing and finance costs.


FA00/SCH22/PARA44 (2) (relevant shipping income) TTM17261
FA00/SCH22/PARA49 (overseas shipping companies) TTM17286
FA00/SCH22/PARA50 (certain interest etc.) TTM17291
FA00/SCH22/PARA51 (general exclusion of investment income) TTM17296