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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Seafarers’ Earnings Deduction: treatment of periods of non- residence and terminal leave pay

Statement of Practice 18/1991The full text of the Statement of Practice is reproduced at

EIM33062. It covers two areas:

  • periods of non-residence and eligible periods and
  • terminal leave pay.

The practice has been applied to individuals who became resident and ordinarily resident in the United Kingdom on or after 6 April 1992.

The High Court decided in the case of Carstairs v Sykes (73TC225) that it was not appropriate to include periods of non-residence in the calculation of an eligible period. This decision supports the general principles that underlie Statement of Practice 18/1991.

Terminal leave payAlthough entitlement to paid leave may have been built up over a period, including a period of non-residence, leave pay is chargeable for the period to which it relates. Treatment of the leave pay differs according to the residence status of the individual during the overseas work period.

Ordinarily resident after an eligible periodThe leave pay may be attributed to the eligible period and covered by the deduction. But only pay that falls into the same tax year as the eligible period. See

EIM33052for a more detailed explanation and example.

Leave period in the United Kingdom following a period of non-residenceWhere the pay is for:

  • a period of terminal leave during which the individual is resident and ordinarily resident in the United Kingdom and
  • the leave period follows a period of non-residencethe terminal leave pay is chargeable under Section 15 (or Section 21 before 6 April 2008) ITEPA 2003 and the deduction cannot apply.