Seafarers Earnings Deduction: tax relief if you work on a ship
If you're an employee working at sea outside of the UK check if you can claim tax relief on your earnings.
If you’re an employee and work at sea, you may be able to reduce your tax bill by getting the Seafarers’ Earnings Deduction.
To get the deduction you must have:
- worked on a ship
- worked outside of the UK long enough to qualify for the deduction - usually a minimum of 365 days
- been resident in the UK or resident for tax purposes in a European Economic Area (EEA) State (other than the UK)
You can’t get the deduction if you were:
- a Crown employee (eg, a Royal Navy sailor)
- not a UK resident
- not a resident of an EEA State (other than the UK)
If you had more than one job you’ll still get the deduction against your seafarer pay if you meet all the conditions.
Tax residence indicator
From 6 April 2013, HM Revenue and Customs (HMRC) formalised the rules that determine if someone is resident in the UK for tax purposes.
HMRC have an online tax residence indicator to help you understand your tax residence status.
Records you’ll need to keep
HMRC may want to check your claim, so you must keep details including:
completed working sheet HS205
air tickets or other travel vouchers
hotel bills or other receipts
passports and visas
seafarer’s discharge book
freeboard logs of the ships you carried out duties on
HMRC may contact your employer to confirm details of your ship’s voyage and crew.
How to claim Seafarers’ Earnings Deduction
To get the deduction from your seafarer earnings you must have an eligible period of at least 365 days that’s mainly made up of days when you were absent from the UK.
To see if you’re entitled to the deduction, work out if your days outside the UK were enough to make up an eligible period.
You can use working sheet HS205 Seafarers’ Earnings Deduction to help you do this.
If you were resident in the UK
You’ll need to register for Self Asessment and fill in a tax return and relevant pages giving details of your income for the tax year you are claiming the deduction for.
If you weren’t resident in the UK but were resident in an EEA State
From the 2011 to 2012 tax year, you can claim the deduction using form R43M(SED) - Repayment Claim - EEA resident merchant seafarer.
Request an NT tax code
It may be possible for you to ask your employer to pay your wages without deducting tax, they would do this by operating a tax code called NT.
To qualify for this code you must:
- be resident in the UK
- be in a Pay As You Earn (PAYE) employment
- be a seafarer working onboard a vessel accepted as a ship for SED purposes
- fill in a Self Assessment (SA) tax return each year
- have a contract of employment of at least 12 months
If you don’t have a 12 month contract, you must have been in continuous employment with the same employer for at least 6 months, working outside the UK.
If the employment against which you wish to claim Code NT ceases or changes so that you no longer qualify you’ll need to tell HMRC immediately. If it later transpires that you were not entitled to the Code NT then you’ll be asked to repay any tax underpaid in one lump sum.
HMRC won’t issue an NT Code until after they’ve processed your first claim to Seafarers’ Earnings Deduction. This claim can be made either twelve months from the start of your seafaring employment or the start of the tax year previous to the year of claim – whichever is the later.
You can use form R44 to request the issue of tax code NT.
There are time limits for claiming Seafarers’ Earnings Deduction:
|Tax year||Tax year ending on||Claim by|
|2011 to 2012||5 April 2012||5 April 2016|
|2012 to 2013||5 April 2013||5 April 2017|
|2013 to 2014||5 April 2014||5 April 2018|
|2014 to 2015||5 April 2015||5 April 2019|
If you were a seafarer who wasn’t resident in the UK or an EEA State
You can’t claim the Seafarers’ Earnings Deduction but you may be able to get your tax back by completing form R43M Repayment Claim if you pay UK tax because you work for UK shipping companies.
If you need help or advice, you can call the Seafarers’ Helpline.