Rishi Sunak grilled by Andrew Marr on cutting taxes
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The Chancellor will shake up the shipping industry tax system to attract more of the world’s largest countries to the UK. Radically overhauling the rules for the first time in two decades, ships that fly the UK Red Ensign – a red flag with the Union Jack in the upper left hoist – will be considered for lucrative tax breaks.
The UK’s tonnage tax regime sees ships charged on the basis of the amount they carry, rather than the profits they make.
Treasury officials hope the plans will attract more businesses to Britain, helping to boost the economy.
Analysis from the Government suggests more than 670,000 jobs in coastal communities will be protected by the plans.
Ahead of his statement to the Commons to announce the Budget on Wednesday, Mr Sunak said: “The UK has always been a proud and pre-eminent maritime nation, with 95 percent of our trade in goods carried out by sea.
“Now we have left the EU, it’s time for us to do even more to help the UK shipping industry to grow and compete in the global market.”
While a part of the EU, firms flying the UK flag had to abide by Brussels rules and could not be treated differently to those from other parts of the bloc.
Now free to make its own rules, Mr Sunak hopes the tax break will encourage more companies to register in the UK to make the most of Britain’s system.
As well as participating in the UK’s tax regime, flying the flag also represents a company’s commitment to follow the laws and regulations of where it is registered.
Global competition has ramped up in recent years and ministers hope the UK’s tonnage regime will help put it at an advantage when businesses are considering where to register.
The tax scheme is estimated to generate an extra £3.1billion for the economy according to research by the Centre for Economics and Business Research.
As well as special provisions being given to those boats flying the UK flag, Mr Sunak is also looking to give the tax break to those who are helping the country to reach its net-zero ambitions.
Ships that lay cables to help create wind farms and scientific research vessels will be accepted if they apply to the regime.
So too will companies that invest in decarbonisation.
Gavin Simmonds, Policy Director Commercial at the UK Chamber of Shipping praised the policy as a chance to boost investment.
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He said: “The Chamber congratulates the Chancellor on responding to the needs of our industry and we welcome this package which will immediately strengthen the UK Flag shipping, encourage innovation in the offshore energy sector and attract international investment.
“It will be important to maintain positive momentum and deliver improvements to the training commitment and to find ways of opening the regime to other shipping businesses in the next year.”
This week’s Budget will be the third Mr Sunak has delivered since becoming Chancellor.
His first, delivered just weeks after taking the job at No11, became largely redundant as the Government shifted its energies into combatting the pandemic just a fortnight after the tax and spending plans were announced.
Mr Sunak’s Budget in March of this year also largely focused on dealing with the Covid crisis.
Wednesday’s announcement has been described by some in Westminster as a “technical Budget”, with the Chancellor not expected to announce many new spending plans as he focuses his efforts on rebuilding the post-pandemic economy.
As well as plan for to attract more ships to the UK, overnight Mr Sunak pledged £6billion to help the NHS clear its backlog and digitising the health service for the future.
Skills, innovation, and economic growth were also central to key pledges, as he said it was vital that public finances were returned to a stable footing.
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