Tax Guide For Seafarers

Tax Guide For Seafarers

What You Need to Know About SED

Because seafarers are usually out at sea at different periods, whether they qualify as a UK resident for tax purposes can be complicated. There are specifications regarding the time spent in or out of the UK, after all.


But a major concern by most seafarers has something to do with the Seafarer’s Earning Deductions (SED).

For The Purposes Of Claiming SED!

A floating production vessel, or any fixed installation for that matter, does not count as a vessel for SED claiming purposes. Although there is no strict definition as to what qualifies as a ship, offshore installations, such as rigs, are specifically excluded where SED is concerned. When a seafarer stands by a new build, he can still claim tax but not 100% of an allowance. This is because HM Revenue and Customs does not consider a new build a vessel until its first sea trials, and that a seafarer does not perform the duties of their employment aboard a ship. It is only when a vessel is capable of navigation will the allowance qualify for 100% claim. A ship in a dry dock may or may not be regarded by HM Revenue and Customs as a ship for tax purposes, affecting a seafarer’s 100% claim. This is especially true if the hull of the vessel is breached for any reason. Under the circumstances, the vessel ceases to be used in navigation. It is highly recommended that you inform HMRC if you serve a ship that is dry docked. A vessel stops being 100% for SED purposes if it goes into dock in preparation to be converted to a floating production storage and offloading (FPSO). Even if it travels halfway around the world, it will not serve its purpose as a ship used for navigation, complete with a crew. There are no rules that refer to the number of days of holiday that can be included in a 100% claim, only those days that a seafarer spends outside the UK. This means that there is no limit to the days holidays per year that can be included in the 100% SED claim.

Living Outside The UK?

A seafarer who is resident outside the UK can claim the 100% allowance if he meets the following criteria: He is a resident of any country in the European Union or the European Economic Area. Following a ruling from the EU, such residency entitles an SED claim starting from 6 April 2011. He must spend sufficient time outside the UK and in a foreign port each year. Make sure to keep any form of evidence that will prove periods of absence, including flight tickets to a home country during your leave. A seafarer is deemed outside the UK for a qualifying day if he is absent from the country or beyond the twelve mile limit at midnight. It is also considered a day out when a vessel leaves its berth before midnight and then goes to a foreign port.

More To Note

Even if a seafarer has another job in the UK, his 100% claim will not be affected. It will affect a seafarer’s overall tax liability, however. Personal allowance can also be offset against the other income. Tax returns of seafarers must be submitted by 31 January, which means that pertinent documents and proof of absence must be prepared weeks ahead to ensure that the return will be submitted on time. Proof of a holiday abroad may include airline or ferry tickets, and credit card slips or other transactions that bear travel dates. To discuss the nature of your tax liabilities and how to go about making a claim, contact us now!

Photo by Elias E on Unsplash

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