Tonnage Tax is an alternative method of calculating corporation tax profits by reference to the net tonnage of the ship operated.
What is operating a ship?
A company is regarded as operating a ship owned by it or chartered* to it, if it is:
- Used by the company, or
- Time or voyage chartered-out, or
- Bareboat chartered-out to another UK group member or, in some circumstances, bareboat chartered-out to a third party where there is short-term over-capacity and the charter does not exceed three years
*A singleton company or group cannot enter Tonnage Tax if more than 75% of its net tonnage is time or voyage chartered-in from outside the group.
What types of ships qualify?
A qualifying ship must be seagoing**, at least 100 gross tons, and used for:
- Carriage of passengers by sea, or
- Carriage of cargo by sea, or
- Towage, salvage or other marine assistance carried out at sea, or
- Transport by sea in connection with other services of a kind necessarily provided at sea
**A ship is regarded as “seagoing” if certificated for navigation at sea by a competent authority of any country.