Plans for the tax change, which would replace corporation tax with a tonnage tax based on the size of the fleet, are expected by tax experts in the government’s shipping policy paper next month. It would result in a lower level of tax on individual shipowners, and the government hopes that would encourage more shipowners to register their vessels in the UK instead of using overseas flags. Any proposal could be introduced in the March Budget.
The size of the UK-owned fleet has shrunk by two-thirds since 1990. Several European countries, including the Netherlands, have seen the size of their fleet increase after introducing a tonnage tax.
Paul Powell, head of the maritime industries group at Moore Stephens, welcomed the possibility of such a tax. ‘With corporation tax, shipowners pay a lot of their profits away in a good year and the industry is in dire straits at the moment. The new tax would be easy to administer because ships already have their gross tonnage.’
Chas North, a transport tax partner at KPMG, said a tonnage tax was ‘possible’ rather than ‘probable’.
He added the shipping industry had always been treated favourably by government.
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