Boost to UK Flagged Shipping Companies in Autumn Budget
[By: UK Ship Register]
Last Wednesday (27th October) the Chancellor announced a series of measures to stimulate growth in the maritime industry, with landmark changes to the UK Tonnage Tax.
The plans are the first shake up the Tonnage Tax rules have had in over two decades, and mean that from April 2022, ships registered to the UK and those who help the UK reach net-zero will both be more likely to be accepted if applying to the UK’s Tonnage Tax regime.
The UK flag has a reputation for maintaining the highest international standards and we want more ships to benefit from this by registering in the UK. The reforms therefore remove any requirement for ships in the UK Tonnage Tax regime to fly the flag of any European country, instead encouraging the use of the UK flag when determining which companies can participate in the UK Tonnage Tax regime. Specifically, UK Flag registration will now be an important contributing factor towards HMRC’s strategic and commercial management test for enrolment in the regime.
Central to the UK’s ambition to transition to net zero by 2050 and recognising its global leadership in science and technology, is the extension of the regime to consider new vessel designs and new models coming to market. This includes ships that lay cables to help create wind farms and scientific research vessels. Companies that bring value to the UK by investing in decarbonisation will also be more likely to be accepted if they apply to the UK’s regime.
The plans also make it easier to join the Tonnage Tax regime. HMRC will now have more discretion to admit companies into the regime that may have missed the initial window of opportunity to join or re-admit companies that left for non-tax avoidance purposes. The lock-in period has also been reduced from 10 to 8 years.
Cruise companies are also set to benefit, with an increase in the allowance for on-board revenue (ancillary income) from 10% to 15%. They should therefore no longer have to audit their finances after every voyage they embark on, cutting down their admin burden.
Brian Johnson, Chief Executive at the Maritime and Coastguard Agency, welcomes the changes saying “These reforms are a welcome move towards stimulating growth in a sector in which the UK has real strengths.
The UK Flag has committed to becoming the best performing international flag and is already a trusted partner to many top-quality shipping companies. These financial reforms now add to the list of many benefits the flag has to offer others thinking about bringing their maritime business to the UK.”
There is also a boost for UK seafarers as the government looks to provide more opportunities for UK Cadets as part of the improvements. HMG and industry will continue to work collaboratively on the commitment to improve training opportunities, and the Department for Transport and the Maritime and Coastguard Agency will now explore how best to use existing powers to ensure the training experience works for our cadets and shipping firms across the sector.
This overall package of reforms aims to see more firms basing their headquarters in the UK, using the UK’s world-leading maritime talent and services industry, and flying the UK flag. They will make it easier for shipping companies to move to the UK, ensure they are not disadvantaged compared to firms operating in other countries and reduce unnecessary administrative burdens.
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