Skip to content

New shipping tonnage tax reformations…

New shipping tonnage tax reformations…

Shipping companies across the world will be offered tax breaks from April 2022 should they fly the UK’s red ensign flag.

As part of the Autumn Budget review, it was announced by the Chancellor of the Exchequer – Rishi Sunak – that any firms flying the historic flag will have a “great chance of joining the UK tonnage tax break scheme” in a push to attract more ships to British shores.

What is the tonnage tax break scheme?

Introduced in 2000, the scheme was implemented to allow shipping companies an “alternative method of calculating corporation tax profits by reference to the net tonnage of the ship operated”.

The scheme allows businesses to pay lower taxes and ensures the rates are more predictable. The new reformations also reduce the lock-in period from ten years to eight years – running more smoothly with shipping cycles.

HMRC will also be given further authority to allow firms into the scheme outside of the official window should there be good reasoning. They will also begin a review of the qualification process to ensure the tax scheme is up to date with the current market and technologies.

The question has been raised as to whether the current amount of claimable capital allowances for firms leasing ships to members of the regime should be increased, meaning another new development in the scheme is the review of ship management by the government

Why now?

Previously, as part of the European Union, ships only had to fly the flag of a European country of choice to qualify for the scheme. Now, in line with Brexit, the government has decided to increase the power of the UK flag, and “reward companies for adopting the UK’s merchant shipping flag, the Red Ensign”.

The government’s stance on reducing the country’s carbon footprint is also a contributing factor. Any ships contributing to the UK’s net zero goals will also have access to the tonnage tax scheme, including vessels such as those laying cables to create windfarms and scientific research craft. Cruise ships will also be considered for the scheme.

To get further information about this news story, emailinfo@maffinancegroup.co.ukcall 0115 958 6872 or fill in an enquiry form below.

get in touch...

If you’d like to get a quote or need further information, simply fill in the form and we’ll contact you on the date and time that you request.
 

If you’re having trouble submitting the form, or want to speak to someone directly, you can call us on
0115 958 6872 and a member of our team will be happy to speak to you.

Alternatively, email us at info@maffinancegroup.co.uk.