UK budget 'generally good news' for shipping: Moore Stephens

The firm says that shipping will benefit from UK chancellor George Osborne’s reduction in corporation tax, from 28% to 20% between April this year and April 2015.

Meanwhile, changes to the capital gains tax will also work in shipping’s favour. Moore Stephens notes that “Last year the government announced that, where a company had a functional currency other than sterling, capital gains and losses on disposals of shares would with effect from April 2013 be calculated in that functional currency rather than in sterling.”

“Now, following representations by Moore Stephens and others,” says the company’s tax partner Sue Bill, “it has been announced that this measure has been extended to cover the disposal of ships and aircraft as well as shares, thus removing an anomaly in the calculation of capital gains and losses arising on ships outside the UK tonnage tax regime.

“Where ships are held outside the UK tonnage tax regime, capital allowances (or tax depreciation) are available in respect of the capital cost of the ship. For many years, no first-year allowances (being accelerated capital allowances available in the year of acquisition) have been available in respect of ships. This exclusion from claiming first-year allowances has now been removed for ships and railway assets. This, however, may be of limited benefit as first-year allowances are currently only available in respect of a limited number of assets, in particular energy-efficient and environmentally beneficial plant and machinery of a description specified by Treasury order, which can qualify for 100% allowances in the first year. Therefore it is not yet clear how beneficial the removal of this anomaly will be in practice.”

“The Budget 2013 is generally good news for the shipping sector, and certain anomalies having a potentially detrimental effect for some shipowning companies have been removed.”

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