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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Foreign travel rules: offshore oil and gas workers: mainland transfers

Section 305 ITEPA 2003

Employees with a permanent workplace at an offshore installation are exempt from income tax where they are provided with:

  • transfer transport
  • related accommodation or subsistence, or
  • local transport.

The exemption also applies where an employee is paid or reimbursed reasonable expenses incurred on such transport, accommodation or subsistence. Before 6 April 2003, the exemption given by Section 305 was provided by Extra-Statutory Concession A65 (ESCA65).

Meaning of offshore installation

See EIM33102 to EIM33104 for guidance on the meaning of offshore installation. The following structures or vessels can be accepted as offshore installations for the purpose of Section 305 ITEPA 2003:

  • fixed production platforms
  • floating production platforms
  • floating production storage and offloading vessels (FPSOs)
  • floating storage units (FSUs)
  • mobile offshore drilling units (MODUs) including drillships, semisubmersible and jack-up rigs
  • flotels (floating accommodation units).

Meaning of transfer transport

Transfer transport means transport by sea or air between the mainland of Great Britain or Northern Ireland and an offshore installation where:

  • the place of arrival or departure on the mainland is one to or from which transport between the mainland and the offshore installation is provided for employees generally and
  • the cost would not be deductible under Part 5 ITEPA if the employee incurred and paid it.

The exemption does not apply to any provision or expense that qualifies for a deduction under the main rules for travelling expenses in Sections 337 to 340 ITEPA 2003 or under the special rules for foreign travel.

An example of a journey that would qualify for the exemption is a helicopter flight from Aberdeen to an offshore oil or gas rig.

This means overnight accommodation or subsistence in the vicinity of the place of departure or arrival on the mainland, which is necessary because of the time at which transfer transport is to be taken. For example, hotel accommodation may be provided in Aberdeen the night before an employee who lives in London flies out to an oil rig from Aberdeen.

It should be noted that the exemption only applies to related accommodation or subsistence that is provided at a reasonable cost.

Local transport

This refers to transport between the place where the employee is provided with related accommodation or subsistence and the place of departure or arrival on the mainland. So in the above example, the exemption also covers the cost of transport between the hotel in Aberdeen and the heliport on the morning of the journey to the oil rig.