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Tonnage tax—introduction

D7.1001 Tonnage tax—overview

Tonnage tax is an alternative charge to corporation tax on relevant shipping profits (D7.1014). It enables certain shipping companies to elect to pay corporation tax on notional profits, rather than on actual commercial profits, in respect of their shipping operations. Ship managers which are not operators of ships can elect to join the regime from 1 April 2024. The primary legislation is contained in FA 2000¹. The tonnage tax regime was introduced as part of a package of measures to help reverse the decline in the UK shipping industry by increasing the direct ownership of shipping by companies within the UK, and increasing the UK's merchant marine workforce.

A company or group that elects to be subject to the tonnage tax regime is known, respectively, as a 'tonnage tax company' or 'tonnage tax group'².

A tonnage tax election may only be made by qualifying companies or groups. Certain requirements must also be met in respect of training, safety standards