Seafarers’ Earnings Deduction If You Work On Board A Ship
If your job means you work at sea, your tax bill could be lowered through the Seafarers Earnings Deduction’ or seafarers tax allowance. Find out what deductions you’re entitled to as a seafarer paying tax.
See if you can claim a tax rebate and let our guide help you through the tax refund process.
How the seafarers earnings deduction works:
To be entitled to this deduction you:
- Will work on a ship. Offshore installations such as oil rigs are not classed as ships for the purposes of SED – cargo vessels, tankers, cruise liners and passenger vessels are however.
- Will work all or part of your job outside of the UK. This means that for each job you must carry out duties on at least one voyage per year which begins or ends at a foreign port.
- Will be resident for tax purposes in the UK, or in a European Economic Area (EEA) State (other than the UK).
The deductions are made from a seafarer’s earnings if they have at least a 365 day ‘eligible period’ where they are absent from the UK.
Tax residence indicator
Rules determining if someone is resident in the UK for tax purposes have been on a statutory basis since 6th April 2013 and are known as the Statutory Residence Test (SRT). For most people, the rules for whether they are resident for tax purposes or not are relatively straightforward. For those whose circumstances are more complex, this SRT will provide more certainty for residence status.
How to calculate the Seafarers’ deduction
To understand whether you are entitled to this deduction, you’ll need to calculate the total number of days you are outside the UK, and whether they are enough to constitute an eligible period. Use the ‘HS205 Help Sheet Seafarers’ Earnings Deduction’ document.
If you have more than one job
If you have multiple jobs, you’ll still be entitled to the deduction as a seafarer if you meet all the above conditions.
What records do I need to keep for an SED tax rebate claim?
If you are applying for the SED it is important to keep as much documentation as possible.
HMRC can ask for relevant paperwork to evidence an SED tax rebate claim and if the evidence is not available can reject your claim or ask for any tax rebate issued to be paid back to them along with penalties.
For your SED tax rebate claim you should keep the following information:
- A completed HS205 Help Sheet
- Travel details such as air tickets and travel vouchers
- Hotel bills and other receipts
- Your passport and any visas
- Your seafarer’s discharge book
- The freeboard logs of any ships you have worked on
How do I get the seafarers’ earnings deduction?
How you apply for the seafarers earnings deduction will depend on your residency status. We have listed the three main residency scenarios below along with
If you are resident in the UK
As a UK resident, you’ll need to complete a Self Assessment tax return and the additional Employment and Information pages. You can use HMRC worksheet HS205 seafarers earning deduction to help you figure what boxes to complete.
If you are resident in an EEA State (other than the UK)
If you are not resident in the UK but are resident in an EEA State, you may be entitled to Seafarers’ Earnings Deduction due to changes made from tax year 2011-12. To reclaim, the form R43M (SED) is used instead of a self assessment tax return.
If you’re a non UK and non EEA resident seafarer
If you’re resident neither in the UK nor in another EEA State, but pay tax to HMRC because you work for a UK shipping company for example, then you may be able to claim back tax. You can use form R43M repayment claim form.
