‘There do not appear to be any significant implications for the shipping sector, which is good news,’ said Sue Bill, shipping tax partner at London based shipping accountants and consultants Moore Stephens.

UK shipowners are unlikely to be paying significant amounts of UK corporation tax. Either they will be in the UK tonnage tax regime, or alternatively they may have decided not to elect into the regime due to the availability of capital allowances on their ships. Therefore it is unlikely that measures such as the proposed reduction in the rate of corporation tax will significantly affect them.

‘Some shipowners may however be adversely affected by the reduction in the rate of writing down allowances for plant and machinery which will be reduced from 25% to 20%, if their ships are in the general pool. Whether or not this applies to all ships will depend on the detailed rules, said Ms Bill. ‘Shipping is in a positive mood and it is good news that overall the government has not made any drastic changes to the UK tax rules which might adversely affect the shipping sector.’

The Chancellor’s business tax reform package makes changes to onshore and small companies’ corporation tax rates and the capital allowances regime and makes increases in the levels of enhanced deduction available to companies on their qualifying expenditure on research and development.

The rate of onshore corporation tax will decrease from 30% to 28% from 2008–2009; the small companies’ rate of corporation tax will increase from 19% to 20% in 2007–2008, 21% in 2008–2009 and 22% in 2009–2010; and North Sea oil and gas ring fence activities will retain a main corporation tax rate of 30% and small companies’ rate of 19%.

The temporary 50% rate of first-year allowances for small enterprises will be extended for a further 12 months.

A new annual investment allowance for the first £50,000 of expenditure on plant and machinery in the general pool will be introduced from 2008 – 2009. The detailed design and scope of this allowance will be the subject of consultation.

From 2008-2009, the rate of writing-down allowances for plant and machinery in the general pool will be reduced form 25% to 20%; the rate of writing-down allowances on long-life asset expenditure will increase from 6% to 10%; writing down allowances on industrial and agricultural buildings will gradually be phased out, with final withdrawal of both regimes by 2010-2011.