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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Seafarers’ Earnings Deduction: example of the effect of Extra- statutory Concession A11

Extra-Statutory Concession A11A seafarer returns to the United Kingdom on the 1 January 2009 after spending 5 years working on cruise ships in the Caribbean. It is her intention to reside here permanently. During the assignment she has been not resident and not ordinarily resident (NR/NOR) even though she is a citizen of the United Kingdom and domiciled here.

She has been absent from the country for 9 months in tax year 2008-09. Under the normal rules residence status is decided for the whole tax year. In 2008-09 she would be regarded as resident and ordinarily resident (R/OR) for the whole year were it not for the effect of ESC A11.

As she intends to live permanently in the United Kingdom ESC A11 is applied automatically. The employee is regarded as NR/NOR for the period 6 April to 31 December and R/OR from 1 January to 5 April 2005.

The employee is required to spend part of her time working on ships engaged on voyages between the United Kingdom and other European ports following her return to the United Kingdom. She decides to request to disapply ESC A11 because in so doing she will gain a tax advantage. As an R/OR individual she is liable to United Kingdom income tax on all earnings. However, disapplying ESC A11 and accepting the strict position of R/OR status for the whole of 2008-09 will allow her to include days of absence from the UK between 6 April and 31 December 2008 in the calculation of her eligible period for Seafarers’ Earnings Deduction and thus reduce her tax bill.

ESC A11 only applies to in-year arrivals and departures.