Tax Guide For Seafarers – TaxBack

from the blog.

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

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!

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