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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Background material: Seafarers

Income tax liability of seafarers

Employees who are ordinarily UK resident in the United Kingdom are taxable on their general earnings under ITEPA03/S15 (or S21 before 6 April 2008) (see Employment Income Manual EIM40101). However, there are two exceptions from this global charge:

  • any chargeable overseas earnings will only be taxable to the extent that they are remitted to the United Kingdom (see EIM40102) and
  • the Seafarers’ Earnings Deduction in ITEPA03/PAT5/CHAPTER6.

The tax position of seafarers can be complex and is explained in detail in the Employment Income Manual at EIM30000 onwards.

Resident employers

An employer is required to deduct tax in accordance with the PAYE regulations on making any payment of, or on account of, any income assessable to tax. An employer for these purposes is defined as any person paying emoluments. The regulations apply to employers paying emoluments to seafarers in the same way as they apply to employers paying emoluments to any other category of employee.

Non-resident employers

Employers who are not resident in the UK are obliged to deduct tax if they have a presence in the UK.  If the employer does not have a presence in the UK, then the obligation to deduct tax may in certain circumstances become the responsibility of the person for whom the seafarer is working. Some employers prefer to operate UK PAYE for the benefit of their UK employees even when there is strictly no obligation to do so. Employers in this position should access this link to arrange for a PAYE scheme to be set up.