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HMRC internal manual

Employment Income Manual

Seafarers’ Earnings Deduction: calculating the deduction

Section 379 ITEPA 2003The deduction is equal to the amount of the earnings from the employment attributable to the eligible period. For these purposes, the amount of earnings is the amount remaining after certain other deductions have been made. It is possible that a seafarer may have carried out employment duties in the United Kingdom during the eligible period. This does not affect the amount of the deduction. It is not necessary to separate out or apportion earnings arising from the United Kingdom and from abroad. Section 379 specifies that all earnings attributable to the eligible period attract the deduction irrespective of where they arose.

Section 381 ITEPA 2003 lists the deductions that should be subtracted first. The net earnings that remain are covered by the deduction so that no earnings from the employment for the eligible period should remain in charge. For further details of the kind of deductions that are made before the seafarers’ deduction see EIM33053. In general terms the deductions are:

  • pension contributions
  • allowable expenses and
  • capital allowances. As an eligible period can begin and end at any point in a tax year and may span more than one tax year only earnings that arise in the eligible period attract the deduction. Earnings for that part of the tax year outside of the eligible period remain taxable under Section 15 (or Section 21 before 6 April 2008) ITEPA 2003, see example

EIM33003.