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HMRC internal manual

Tonnage Tax Manual

Tonnage tax groups: Outline

Group for the purposes of tonnage tax has a wider meaning than for normal corporation tax purposes.  This is in order to prevent a family grouping, or a group controlled overseas, from manipulating company ownership so as to pick and choose which companies to place inside and outside tonnage tax.

Group procedures

Although the UK system of corporate taxation is predicated upon an individual company making its own return, the tonnage tax regime provides, amongst other procedures, for a group:

  • election,
  • 75 per cent test
  • finance cost adjustment

To facilitate these there are a number of statutory provisions and administrative procedures for dealing with a tonnage tax group.

Companies entering and leaving group

Because an election into tonnage tax is for at least ten years, there are rules to deal with situations where there are mergers between tonnage tax and non-tonnage tax companies and groups, and to help decide whether they should stay in or leave the regime.


FA00/SCH22/PARA116 onwards (groups, mergers and related matters) TTM17656
Meaning of ‘group’ TTM12010
Group arrangements TTM12200
Mergers TTM12300
Demergers TTM12400