How is tonnage tax profit calculated?

A profit for each day a ship is operated by a company is calculated by reference to the following table:

The daily profit is multiplied by the number of days operated (for a normal year 365).

A similar calculation is done for each ship operated.

The total for all ships is the company’s tonnage tax profit for the accounting period.

Example 1: For 365 days the tonnage tax profit of a singleton company with a 30,000 net ton bulk carrier would be £36,135.

At the full rate of corporation tax of 28%, tax payable would be £10,117.80.

Example 2: For 365 days the tonnage tax profit of a singleton company with a 250 net ton supply vessel would be £438.

At the full rate of corporation tax of 28%, tax payable would be £122.64

(Rates of corporation tax vary, depending on the total profit of the company and the number of companies in a group)

What profits are included?

The actual profits covered by a tonnage tax profit include those from:

• Core qualifying activities in operating its own ships
• Other necessary ship-related activities integral to the above
• Qualifying secondary activities
• Qualifying incidental activities, not exceeding 0.25% turnover from qualifying core and secondary activities
• Distributions from overseas shipping companies (which only operate qualifying ships)
• Loan relationship profits and foreign exchange gains, which would otherwise be trading income
• Gains on disposal of tonnage tax assets