Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

International Manual

From
HM Revenue & Customs
Updated
, see all updates

DT applications and claims - Types of income: Pensions and Annuities

Merchant Navy pension

When a seafarer retires, the treatment of their pension should follow the established treatment of their wages. If their wages were subject to PAYE (because they worked for a UK employer performing duties in the UK) their pension is also liable to UK tax.

Sometimes a seafarer receives a Merchant Navy pension and is resident in a country that either does not have a Double Taxation Agreement (DTA) with the UK, or where the treaty does not have a pensions article. You will see this problem most often when you are dealing with seafarers who are resident in the Isle of Man or the Channel Islands and are receiving a Merchant Navy pension because they have worked on ferry services to the United Kingdom.

Where there is no pension article in a DTA (as with the Channel Islands and the Isle ofMan) or no double taxation treaty at all, you have to consider

  • The location of previous employment duties.
  • The person’s residence status whilst carrying out these duties.
  • And the provisions of EP8281

in order to decide if the pension is exempt from the operation of PAYE.