Seafarers Earnings Deduction

Seafarers Earnings Deduction

A Look at Seafarer Tax Return

The Seafarers earnings deduction as part of HMRC’s legislation allows people working onboard ships to claim a tax relief of 100% on foreign earnings. There are clauses though, you need to work out the intricacies of how you qualify and which vessels HMRC class as ships. This article sets out to educate you on seafarer tax return and seafarer earnings deduction.

What Do I Need to Qualify for Seafarers Earnings Deduction (SED)

  • Have worked on a ship
  • Worked outside of the UK for the stipulated period to qualify for the concession; which is a minimum of 365 days
  • Have been a resident in the UK or for tax purposes a resident in any European Economic Area (apart from the UK)

How do I Qualify for the Tax Deduction as a SED

  • As a Crown Employee such as working in the Royal Navy as a sailor
  • A resident outside of the UK
  • Not an EEA state resident

Of course, while all these factors are simple enough to qualify for UK expat tax you must first be employed on a vessel which HMRC deems to be a ‘ship’ under SED regulations. 

Related Post: Tax Returns 2019: Important Deadlines!

What’s Counted a ‘Ship’ for SED Purposes

Offshore installations are off the cards and not considered as ships for SED purposes. In this case, if your ship is used for these purposes and is kept stationed for more than 5 days, it will not be considered a ‘ship’ under HMRC regulations; vessels used as below do not qualify.

  • A vessel used to exploit or explore mineral resources is not a ‘ship’ in the eyes of HMRC
  • Used for storing gas or as recovery 
  • Used as a ‘flotel’ to house personnel who are engaged in the above activities

Also by stationed, HMRC is not talking about anchored ships! Yes, its rather complicated which is why most seafarers choose to enlist our tax accountants to help you tackle strict HMRC regulations and claim the maximum on your seafarer tax refunds; contact us today!

Related Post: Seafarer’s Earnings Deduction Overview

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