The Seafarer’s Earnings Deduction (SED) is one way for employees
working at sea, or on a ship to reduce their tax bill. But it is
only applicable to those who qualify.
What is considered a ship by tax law?
While there are no specific rules or information about the kind
of ship that employees have to be in to qualify for SED, offshore
installations have been specifically identified as not a ship. So,
if you are working on an installation, you may not qualify an SED
claim. Some of the work areas they consider offshore installations
are fixed production platforms, floating storage units, floating
production platforms, mobile offshore drilling units, flotels, and
floating production storage and offloading vessels (FPSOs).
What qualifications need to be met to claim SED?
First off, all your duties must be performed on a ship. If there
are other tasks that you need to perform off the ship, they must be
incidental your ship duties.
You can only claim SED for duties performed outside the UK
during the qualifying period, which refers to days that you’re
absent from the UK. Other qualifying periods are: no single return
visits that last for more than 183 days spent consecutively.
Intervening days you spent in the UK must not be more than half of
the days you spent abroad.
For instance, to make an SED claim for a period of 365 days, you
must spend 275 days abroad and only 90 days in the UK.
Because the UK tax system is quite complex, it is best to seek
professional advice from tax specialists, especially where your SED
claims are concerned.