From April 2022 shipping companies will be offered tax incentives if they fly the UK’s historic merchant shipping flag, the red ensign. The chancellor, Rishi Sunak, announced in the budget on Wednesday that shipping companies which fly the red flag with the union jack would have a greater chance of being able to join the UK tonnage tax break scheme. The arrangement, which was introduced in 2000, allows shipping companies access to an “alternative method of calculating corporation tax profits by reference to the net tonnage of the ship operated”. The tonnage tax scheme allows shipping firms to pay predictable, much lower taxes, which one expert said created a “close to zero tax environment”. Ships that are working to help the UK’s net zero carbon emissions are also more likely to be accepted to the scheme. This includes scientific research vessels and ships that lay cables to help create windfarms. The red ensign, also known as the red duster, has been flown by British merchant or passenger ships since 1707.