Do you spend the majority of your working life on a ship?
If so, your tax status may be very different to someone working onshore. You may be able to significantly reduce your UK tax bill by claiming something called Seafarers’ Earnings Deduction.
Our guide tells you five things you should know about this tax allowance.
1. What is Seafarers’ Earnings Deduction?
Seafarers’ Earnings Deduction is a way of reducing your tax bill if you can prove that you have worked outside the UK, on a ship, for more than a pre-determined ‘eligible period’.
2. Are You Eligible?
You are eligible for this valuable tax allowance if you perform all your duties of work on a ship. A ‘ship’ is not defined in tax law but it excludes any so-called ‘offshore installations’ such as production platforms or drilling units.
The employment duties of a seafarer are regarded as being performed outside the UK if they are carried out on a vessel that is engaged on a voyage or part voyage which begins or ends outside the UK.
Anyone who works on a ship can benefit from this tax allowance, including cooks, musicians, engineers and so on.
3. “Eligible Periods”
The tax relief is available on the number of days you are absent from the UK. You are absent from the UK on a particular day if you are outside the UK at midnight at the end of that day. Non-work days spent outside the UK may also be counted as days of absence. A return visit to the UK can also count towards the eligible period if:
• no single return visit lasts for more than 183 consecutive days, and
• the total number of days you have spent in the UK is not more than one-half of the total number of days from your first day abroad to the last day of the period you spent abroad after that return visit.
If you have an eligible period of 365 days or more you may be able to make a claim.
4. Proving your Eligibility
HMRC might ask you to provide that you were absent from the UK. You should therefore keep your discharge book and any other documents which support your claim including hotel bills, visas and air tickets.
You are likely to be asked to name the ships on which you performed employment duties outside the UK.
5. How to claim
If you want to claim Seafarers’ Earnings Deduction, you need to complete a Self-Assessment tax return. You will also have to complete the supplementary Employment and Additional Information pages.
HMRC can help you with your claim, as can a reputable tax agency. If you have not claimed this tax allowance before, you may be able to claim for the last four tax years as well as this year.