The UK is opening up its tonnage tax system to new entrants for the first time in nearly 18 years.

The move is part of a shake-up of the regime announced in the budget on Wednesday to try to increase investment and jobs in shipping.

From June, shipping companies that have previously left the system have 18 months to decide whether to return.

Third-party vessel managers will also be able to join for the first time, from April 2024.

Members of the scheme pay tax only on the gross tonnage of their ships. This works out at a lower rate than corporation tax on profits.

The limit on capital allowances for lessors of ships into the regime will also increase to £200m ($241m).

The moves follow reforms announced in the autumn budget of 2021, and subsequent reviews.

The idea is to increase the number of firms headquartered in the UK after Brexit.

“The window will enable these companies to take advantage of the substantive reforms to the regime that took effect last year,” the government said in its budget document.

A UK Chamber of Shipping spokesperson said: “Tonnage tax in the UK directly supports over 50,000 jobs in the shipping sector and hundreds of millions of pounds of tax revenue.

Further reform needed?

“The opening of an election window, for the first time in nearly two decades, alongside the ability for third-party ship management companies to join, is welcome news and will provide companies with a long-overdue opportunity to join.”

But the chamber believes further reform is necessary to make the system a world leader, including greater flexibility around how companies are able to opt into the regime.

The tax was introduced in 2000. In 2021, the government said it was making joining easier by reducing the lock-in period from 10 years to eight to align it more closely with shipping cycles.