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HMRC internal manual

Employment Income Manual

Seafarers' Earnings Deduction: meaning of United Kingdom

Section 1013 ITA 2007 and Section 41 ITEPA 2003

The United Kingdom includes:
 

  • England
  • Wales
  • Scotland
  • Northern Ireland.

The territorial sea extending 12 miles out from the shore-line is also part of the United Kingdom for tax purposes.

The designated areas

The Continental Shelf Act (1964) identified certain areas of the North Sea and North Atlantic as being within the jurisdiction of the United Kingdom for the purposes of oil and gas exploration and exploitation. Section 41 ITEPA 2003 deems that any general earnings arising from employment duties performed in a designated area in connection with exploration and exploitation activities shall be treated as if they arose from duties performed in the United Kingdom.

Effect of Section 41 on location of duties for the purposes of the deduction

Section 382(3) ITEPA 2003 deems that for the purposes of deciding whether duties of the employment have been performed outside the United Kingdom, a designated area shall be treated as part of the United Kingdom. In consequence, employees who perform duties on ships engaged on voyages or part voyages that begin or end in the designated areas are regarded for the purposes of the deduction as performing duties in the United Kingdom. However, different treatment applies when identifying days of absence for the purpose of calculating an eligible period.

Effect of Section 41 on Section 378(4) ITEPA 2003: absence for the purposes ofcalculating an eligible period

Section 378(4) does not contain a reference to Section 41 nor to the designated areas. In consequence if an employee is in a designated area at midnight then the day that ended at midnight is a day of absence from the United Kingdom for the purposes of calculating an eligible period.