Do you spend most of your time offshore? Whether you work in the shipping industry or on a cruise ship. You may be due a seafarers tax refund.
According to HM Revenue & Customs, certain criteria must be met in order to qualify for a Seafarers Tax Refund, more officially known as a Seafarers Earnings Deduction (SED) or the Foreign Earnings Deduction (FED). The refund is available only to those who are ordinary residents of the UK or – in some cases – of the EEA, who are working aboard ships for a 365 day period and who spend at least some of the year at least 12 nautical miles outside of the UK.
When do Seafarers Tax Refunds Apply?
The period spent outside of the UK doesn’t necessarily have to involve employment. Holidays and non-employment travel are also considered valid reasons to be out of the country. Remember, though, in order to claim the Seafarers Earnings Deduction, one must begin and end the 365 day period with time outside of the country. One must also not spend 183 or more continuous days during that year-long period inside of the UK.
Employment during each tax year must involve at least one voyage or partial voyage that begins or ends at a valid foreign port. For tax purposes, an oil or gas installation outside of the UK or the UK continental shelf is considered a foreign port. However, tax law does not define “offshore installations” as ships, and offshore installations are excluded as areas of employment where one can claim the deduction. By law, a ship is defined as a vessel capable of navigation and used for navigation.
Those who are not ordinary residents of the UK or the countries included in the EEA may be able to qualify for tax relief on employment by a UK company that takes place outside of the UK and the UK continental shelf as a nonresident mariner.
Individuals who meet the criteria for the refund can claim back up to 100 percent of the UK tax that they’ve paid throughout the year.