Tonnage Tax
UK tax glossary · Last reviewed: April 2026
Tonnage Tax is an alternative Corporation Tax regime available to UK shipping companies operating qualifying ships in international waters. Instead of paying CT on actual profits, companies pay tax on a notional profit calculated from the net tonnage of their vessels.
The regime aims to keep international shipping activity registered and managed in the UK. Companies must elect into Tonnage Tax for a minimum 10-year period. Once elected, shipping profits are outside the normal CT computation, though non-shipping income remains subject to standard CT.
Tonnage Tax is administered by HMRC's Large Business directorate. It is a niche but economically significant regime for the UK maritime sector, enabling UK-flagged vessels to compete on a level playing field with countries that have similar or more generous shipping tax regimes.
Common questions
Who is eligible for Tonnage Tax?
UK resident companies that operate qualifying ships (used in international trade, research, or other qualifying activities) and are strategically and commercially managed in the UK. A group election is required if any group member elects.
How is notional profit calculated under Tonnage Tax?
A daily notional profit per 100 net tonnes is set by statute (£0.60/day for the first 1,000 tonnes, reducing at higher tonnage bands). Total annual notional profit is taxed at the standard CT rate.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.