Since 2000 recruitment of professional seagoing officers has doubled, and the UK owned and registered fleets have grown three and six fold respectively. Shipping now earns £1.5 million every hour of every day for the UK economy. None of this would have been possible without the tonnage tax.
What is the tonnage tax?
The tonnage tax allows companies ‘commercially and strategically managed’ within the UK to have their taxable profits from shipping activities determined according to the carrying capacity of the ships in their fleet.
Introduced in the year 2000, this system reflects the norm in many other countries throughout the world and is explicitly approved under the EU’s state aid policy. The UK regime is unusual in that companies must commit to train new recruits every year, to nurture and protect UK talent.
The tonnage tax aims to create a positive fiscal environment both to keep shipping companies within the UK and to create an incentive for inward investors. This generates jobs, retains skills and contributes to economic growth.
The impact of UK tonnage tax
In the last quarter of the twentieth century, both the UK fleet and the number of seafarers were in long-term decline. Since 2000:
- UK-owned fleet has grown by almost three times
- UK-registered fleet – albeit from a very low base – has grown by more than six times
- number of new entrant officer trainees has more than doubled
- shipping industry’s contribution to UK GDP has been 2-3 times as large as it would otherwise have been
- this additional activity supports around 70,000 extra jobs in the UK.
For further information on the tonnage tax, including its history, key statistics and an outline of the challenges faced by the regime, a Maritime UK pamphlet is available for download.
Maritime UK: The success of the tonnage tax