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HMRC internal manual

Employment Income Manual

Seafarers’ Earnings Deduction: example of eligible period straddling tax years

Section 379 ITEPA 2003An employee worked for a shipping company in its Southampton offices until January 2004 when she was assigned to work on one of the company’s cruise liners operating in the Caribbean. She left the United Kingdom on 1 January 2009 and returned to shore based employment in Southampton on 1 January 2010.

During the year the employee:

  • remained ordinarily resident in the United Kingdom
  • performed the duties of an employment as a seafarer outside the United Kingdom
  • achieved an eligible period of at least 365 days. In consequence all of the earnings attributable to the eligible period are covered by the deduction.
Salary for the period £24,000  
Travelling expenses £2,000  
  £26,000 £26,000
Deduction under Sections 337 to 338 ITEPA 2003 for travelling expenses   £2,000
Amount to be covered by the Seafarers’ Earnings Deduction   £24,000

The eligible period straddles tax years 2008/09 and 2009/10. In general terms;

  • 3 months of the eligible period falls into 2008/09 and
  • 9 months falls into 2009/10.The amount of the deduction for 2008/09 is £24,000 x 3/12 = £6,000.

For 2009/10 it is £24,000 x 9/12 = £18,000.

See EIM33051 for further guidance on attribution of earnings.