Tonnage tax overview

Tonnage tax is a niche area of corporate taxation which was first introduced in the UK in 2000 and applies to companies that operate ships. It was aimed primarily at stimulating the UK shipping industry as well as providing the UK with a regime to compete with fellow EU countries. It is an elective regime and is a legal way of achieving low taxation in return for providing economic benefit to the UK. Instead of companies paying corporation tax based on commercial profits tonnage tax profits are calculated based on the net tonnage of vessels operated and the number of days in the accounting period.

If a valid election is made to use the tax this remains in force for ten years. Companies can then re-elect before the end of that period or make a rolling election each year ensuring there is always ten years left...