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HMRC internal manual

Tonnage Tax Manual

Background Material: Seafarers

Seafarers earnings deduction (SED)

Performance of duties on a shipSeafarers who are resident and ordinarily resident in the UK may be entitled to a seafarers earnings deduction (SED) of 100% against their emoluments.

Meaning of seafarerSection 384 ITEPA defines employment as a seafarer as an employment other than Crown employment (see

EIM33035) consisting of the performance of duties on a ship or of such duties and others incidental to them.

Employees who are seafarers for this purpose will therefore include not only sailors but also anyone whose work is carried out on ships, such as cooks, entertainers and couriers on luxury liners. It does not matter if some of the duties are not performed on board ship so long as they are incidental to those that are.

Definition of ‘ship’There is no statutory definition of the word ship. The Court of Appeal decided in the case of Perks v Clark and others (74TC187) that for the purposes of the deduction a ship must be:

  • capable of navigation and
  • used in navigation.Navigation means ordered movement across the water. To be a ship, a vessel does not need to have a rudder or its own motive power.

Structures that do not normally move about are not generally regarded as ships as they are not used in navigation. These include fixed production platforms, accommodation barges, light and weather ships, etc.

There is a statutory exclusion for offshore installations – see TTM05360


Income tax liability of seafarers TTM15300
Residence and ordinary residence TTM15310, EIM33000+ EIM33001, EIM42800
Resident and ordinarily resident in UK TTM15320, EIM33000, EIM33001, EIM42800
Resident, but not ordinarily resident, in UK TTM15330, EIM42800 et seq
Not resident in UK TTM15340, EIM42800 et seq
Offshore installations and SED TTM15360, EIM33102, EIM33103, EIM33104
Conditions of SED TTM15370, EIM33001 et seq
Guidance for seafarers and employers TTM15300