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HMRC internal manual

Employment Income Manual

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Employee resident, ordinarily resident or domiciled outside the United Kingdom: location of duties performed on a vessel or aircraft: example

Section 40 ITEPA 2003

The following examples illustrate the effect of the statutory rules in section 40 that deem certain duties to be carried out inside the United Kingdom. See EIM40206 for an explanation of the legal background.

Example 1

A merchant navy ship sails from Felixstowe to Aberdeen. The ship’s course takes it outside of United Kingdom territorial waters for a part of the voyage.

All of the crew members are treated as performing duties in the United Kingdom during the voyage. Their earnings for these duties will be UK-based earnings chargeable under Section 15 (resident but not ordinarily resident) or Section 27 (not resident).

Example 2

An aircraft flies from Edinburgh to Dusseldorf.

Resident crew members are treated as performing duties in the United Kingdom throughout the flight. Earnings for these duties are UK-based earnings chargeable under Section 15 (resident but not ordinarily resident).

Non resident crew members are not treated as performing duties in the United Kingdom throughout the flight. Only earnings for duties actually performed in the United Kingdom are UK-based earnings chargeable under Section 27.

Example 3

A merchant navy ship steams from Southampton to Ostend. It remains in United Kingdom coastal waters until it is off Harwich. It then leaves territorial waters.

Resident seafarers are treated as performing duties in the United Kingdom throughout the voyage. Earnings for these duties are UK-based earnings chargeable under Section 15 (resident but not ordinarily resident).

Non resident seafarers are not treated as performing duties in the United Kingdom throughout the voyage. Only earnings for duties actually performed in the United Kingdom (including territorial waters) are UK-based earnings chargeable under Section 27.

Different rules for the Seafarers’ Earnings Deduction: Part 5 Chapter 6

Note that different rules apply for the purposes of the Seafarers’ Earnings Deduction (see EIM33033).