Tax Relief for UK Ship Workers
Do you happen to work on a ship and are unsure about the particular regulations and rules that define the Seafarer’s Earnings Deduction tax law? Within this article, you will find out whether or not you qualify and we will educate you on the details regarding this tax law. It is a great tax law that offers a UK residents who are employed as a seafarer who works outside of the country on a ship the ability to pay absolutely no taxes on his or her earned income. This is an excellent piece of legislation that was created to help with the competitive labor market and to help with more UK residents being spread around the seas for military reasons. We will show you whether or not you qualify for this special piece of legislation when you continue reading below.
There are guidelines and rules that are needed to be followed in order to receive this tax break. You need to prove that you worked on a ship and that your duties were working on the ship or were directly related to duties on a ship. Secondly you have to be outside of the UK working for 365 consecutive days or longer to qualify for the Seafarer’s Earnings Deduction tax deduction. You can also receive this deduction if you are a resident for tax purposes of the UK or any other European Economic Area State.
So how exactly does one go about registering for this special tax exemption? When one researches the tax laws there is not a lot explained and it is hard to understand. However, we have outlined the basic rules and things you have to complete below. To begin with, you will need to keep your records including such things as your HS205 worksheet, passports and visas, seafarer’s discharge books, freeboard logs of ships where you worked, hotel bills, airline tickets, travel vouchers and other related receipts. It pays off to hang on to these as you can be reimbursed for them. Also as mentioned earlier to you have had to spend at least 365 consecutive days outside of the UK to qualify for this tax exemption. Unfortunately, military personnel does not qualify for this tax discount, however, this may be different in the future if the laws are changed.
You have to claim the Seafarer’s Earnings deduction within set time limits to benefit from the deductions. As an example, for the tax year 2014 to 2015 you would have to make your tax claim by the fifth of April in the year 2019. If you happen to be a seafarer who is not a resident of the UK or an EEA State but paid UK tax, you would not be eligible to qualify for the SED. However, you would be allowed to claim back tax using the R43M Repayment Claim.
Not every seafarer is destined to be able to use the Seafarers Earnings Deduction. In order to take advantage of the tax deduction, you have to be employed on a “ship” However what a “ship” actually is, is not clearly defined by tax laws. But if you work in the oil or gas drilling industries there is a chance that you will not be eligible for the tax discount. For UK residents who are employed on offshore installations are not entitled to the tax break. What constitutes an offshore installation is defined amongst the laws. We will outline what is considered an offshore installation as the following:
- floating and nonfloating platforms
- floating production storage and offloading vessels
- storage units that are floating
- mobile offshore drilling vessels
- drill ships
- semi-submersible drilling vessels
Also as we mentioned before people who are employed by the military who spend time in foreign territory are exempt from the SED. Another thing that is highlighted in the laws is that a Seafarer must enter and exit from ports that are outside of the United Kingdom. The Seafarers Earnings Deduction has not been around as a law for a long time and has undergone a few different variations and updates throughout the years. Ultimately it benefits all United Kingdom seafarers and makes the global competition of the labor market more easy to navigate and benefit from.
It is worthwhile to do all your taxes and to do them properly. Not taking advantage of this tax exemption would be a mistake and not declaring your taxable income would be even worse. If you are employed as a Seafarer and work in foreign ports and waterways then, by all means, collect and keep all your receipts related to your employment.
It doesn’t matter where you have been located, just as long as you were not stationed in UK waters for over 183 days in any given calendar year. But take note – this only applies to UK citizens! So for example, if you have emigrated or have changed citizenship by moving to New Zealand from the UK, then your tax status has changed and you must declare your earnings as a Kiwi citizen and not a Brit.
So it pays to make sure you know exactly what your personal tax status is before embarking on a career in yachting and yacht crew.
The author wishes to thank the following websites for use of reference material, links and imagery: