UK TONNAGE TAX: TIME FOR SHIPPING FIRMS TO RECONSIDER?

• The limit on capital allowances has been increased from £80 million to £200 million for lessors who lease ships to companies which are subject to the UK Tonnage Tax regime. This change, which was introduced in 2024, should encourage the leasing of ships in the UK, as lessors will be able to obtain a much greater tax deduction (and thus significantly reduce their tax bills).

• April 2023 saw the UK corporation tax rate increased significantly from 19% to 25%. This was the first time the UK main rate had been increased since 1974! As a result, the amount of tax saved by being in the regime has increased further.

Brexit was a catalyst for many shipping companies to move overseas, however, now the rules around tonnage tax are more favourable, many of these businesses may consider returning.

There has been much debate around both the political and economic impact of Brexit. Changes to the tonnage tax regime following Brexit have all been positive though, and aim to boost the UK’s maritime sector, by reducing administrative burdens and making it easier for shipping companies to operate.