Income Tax: extending Seafarers' Earnings Deduction to the Royal Fleet Auxiliary
Published 22 November 2017
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Who is likely to be affected
Employees of the Royal Fleet Auxiliary.
General description of the measure
This measure brings employees of the Royal Fleet Auxiliary within the scope of the definition of a seafarer contained in Chapter 6 of the Income Tax Earnings and Pensions Act 2003 (ITEPA 2003).
This measure will allow eligible employees of the Royal Fleet Auxiliary to claim Seafarers’ Earnings Deduction.
Policy objective
Employment in the Royal Fleet Auxiliary is treated as Crown employment for tax purposes, and those in Crown employment are unable to claim Seafarers’ Earnings Deduction.
The Royal Fleet Auxiliary is a seafaring organisation and employees of the Royal Fleet Auxiliary who have claimed Seafarers’ Earnings Deduction and met the other conditions, have been given the deduction on a concessionary basis.
This measure provides certainty to the Royal Fleet Auxiliary that this treatment can continue, for those employees who are eligible to claim.
Background to the measure
This measure was announced at Autumn Budget 2017.
Detailed proposal
Operative date
The measure will have effect on and after the date of Royal Assent to Finance Bill 2017-18.
Current law
The current legislation is contained in section 384 of Chapter 6 of ITEPA 2003. It sets out the meaning of employment as a seafarer, and restricts this meaning to ‘other than crown employment’.
Proposed revisions
Legislation will be introduced in Finance Bill 2017-18 to amend section 384 of ITEPA 2003 and clarify that ‘other than crown employment’ does not mean employment in the Royal Fleet Auxiliary.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will affect around 900 employees of the Royal Fleet Auxiliary, and will make it clear that these employees can claim Seafarers’ Earnings Deduction.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure benefits members of the Royal Fleet Auxiliary. It will impact those protected characteristics shared by members of the Royal Fleet Auxiliary.
Impact on business including civil society organisations
This does not have an impact on businesses and civil society organisations.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other)
It is anticipated that there will be negligible operational impacts for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from tax returns and kept under review through regular communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please email: employmentincome.policy@hmrc.gsi.gov.uk.