Who’s more likely to be affected
Corporations liable to Company Tax who present third occasion ship administration providers to operators of ships inside the tonnage tax regime.
Basic description of the measure
Tonnage tax is a type of Company Tax geared toward boosting the competitiveness of the UK inside the worldwide transport trade. Entry to the regime is accessible on election to ‘operators’ of qualifying ships. Operation is outlined on this context as proudly owning or leasing the vessels. The measure extends the scope of tonnage tax to permit entry by third occasion ship managers.
Coverage goal
The target of this measure is to make the tonnage tax regime extra internationally aggressive and encourage the expansion of the UK based mostly third occasion ship administration market.
Background to the measure
This measure was introduced at Spring Finances 2023.
It follows a overview on whether or not to incorporate ship administration inside scope of the tonnage tax regime. The overview was introduced at Autumn Finances 2021 alongside different reforms to tonnage tax.
Detailed proposal
The measure can have impact for elections into tonnage tax made by third occasion ship managers on or after 1 April 2024.
Present regulation
The tonnage tax regime is ready out at Schedule 22 Finance Act 2000. It’s out there on election, and election is just open to ‘operators’ of qualifying ships, outlined as that means homeowners and lessors.
Proposed revisions
Tonnage tax elections will, if circumstances are happy, be open to qualifying firms and teams who ‘handle’ qualifying ships, in addition to to those that function them.
The present tonnage tax guidelines will on the whole apply to ship managers as they do to operators, however with sure exceptions. Operators should fulfil a coaching requirement for ships’ officers or rankings on a per vessel foundation, however this is not going to apply to 3rd occasion managers as this is able to duplicate necessities in respect of the identical vessels. The rule which limits the quantity of vessel tonnage which may be chartered in by an operator on phrases that the operator undertakes restricted exercise, however leases the vessel with providers supplied, is not going to apply to 3rd occasion ship managers. The tonnage tax income substituted by the laws, geared to the notional carrying capability of the qualifying vessels instead of the same old tax-adjusted industrial income, will probably be set at a decrease fee per ton for ship managers.
Abstract of impacts
Exchequer affect (£ million)
2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028 2028 to 2029 empty empty empty empty empty empty
The ultimate costing will probably be topic to scrutiny by the Workplace for Finances Accountability ( OBR ), and will probably be set out on the subsequent fiscal occasion.
Financial affect
This measure will probably be formally assessed as soon as costings have been licensed by the OBR , however isn’t anticipated to have important macroeconomic impacts.
Influence on people, households and households
There’s anticipated to be no affect on people as this measure solely impacts companies.
Equalities impacts
It isn’t anticipated that there will probably be impacts on these in teams sharing protected traits.
Influence on enterprise together with civil society organisations
The measure will have an effect on a restricted class of third occasion ship managers who elect into the tonnage tax regime. One-off prices might embrace familiarisation with the adjustments, figuring out which components of the enterprise fall inside the regime, updating new software program and coaching/upskilling employees. Persevering with prices might embrace having to maintain and keep data and finishing the required type CT600F. Buyer expertise is predicted to stay broadly the identical because it doesn’t change how companies work together with HMRC.
It isn’t anticipated to affect on civil society organisations.
Operational affect (£ million) (HMRC or different)
There could also be some restricted affect to HMRC when coping with tonnage tax returns. It will likely be obligatory to revamp type CT600F to accommodate returns by qualifying third occasion ship managers.
The HMRC Tonnage Tax Guide will probably be amended.
Different impacts
Different impacts have been thought-about and none have been recognized.
Monitoring and analysis
The measure will probably be saved beneath overview by communication with affected taxpayer teams.
Additional recommendation
When you’ve got any questions on this variation, please contact Victor Baker, phone:03000 585490 or electronic mail: victor.j.baker@hmrc.gov.uk.
