Guidance

HS205 Seafarers' Earnings Deduction (2021)

Updated 11 April 2024

This helpsheet helps you to decide if you qualify for the Seafarers’ earnings deduction. If you do, it allows you to calculate your eligible period and for the deduction to be entered in box 11 on page Ai 2 of the Additional information pages of your tax return.

The deduction is available to employees who are UK residents and to non-UK residents who are resident in an EU or European Economic Area (EEA) state. EU or EEA residents who wish to claim the deduction should submit form R43M(SED) to HMRC to reclaim tax deducted under PAYE. This form is available at Seafarers earnings deduction: tax relief if you work on a ship.

You can qualify for the deduction if you:

• perform all your duties on a ‘ship’
• perform most of your duties on a ship, and the other duties are incidental to the duties on the ship
• worked outside of the UK long enough to qualify for the deduction – usually a minimum of 365 days
• have been resident in the UK or resident for tax purposes in an EEA state other than the UK

You cannot get the deduction if you were:

• a Crown employee (for example, a Royal Navy sailor)
• not a UK resident
• not a resident of an EEA state (other than the UK)

Employment in the Royal Fleet Auxiliary is treated as a Crown employment for tax purposes. However, as it is a seafaring organisation, Royal Fleet Auxiliary employees qualify for the deduction if they meet the other conditions.

The word ‘ship’ is not defined in tax law, but ‘offshore installations’ used in the offshore oil and gas industry are specifically identified and are not regarded as ships for the purposes of the deduction. Examples of offshore installations, given as a guide only, are:

• fixed production platforms
• floating production platforms
• floating storage units
• floating production storage and offloading vessels
• mobile offshore drilling units (drillships, semi-submersibles and jack-ups)
• flotels

Any vessel engaged in exploitation of mineral resources by means of a well whilst standing or stationed in any waters, is an offshore installation.

If you work on an offshore installation anywhere in the world, you’re not regarded as a ‘seafarer’ for the purposes of the deduction and your earnings for duties performed on such a vessel or structure will not qualify for the deduction. This includes earnings for duties performed in periods where the vessel or structure:

• is moving between locations
• has temporarily changed its use
• has temporarily been taken out of use

The employment duties of a seafarer are regarded as being performed outside the UK if they are carried out on a vessel that’s engaged on a voyage or part voyage which begins or ends outside the UK. For this purpose, the UK sector of the North Sea is treated as part of the UK. If you had more than one employment in the eligible period, you may only claim the deduction for those in which you performed duties outside the UK.

1. How to complete the working sheet

An ‘eligible period’ is made up mainly of days when you’re absent from the UK. You’re absent from the UK on a particular day if you’re outside the UK at midnight at the end of that day. Non-work days spent outside the UK may be counted as days of absence. A return visit to the UK can also count towards the eligible period if:

• no single return visit lasts for more than 183 consecutive days
• the total number of days you’ve spent in the UK is not more than one-half of the total number of days from your first day abroad to the last day of the period you spent abroad after that return visit

Days spent in the UK may only be counted if they occur between periods of absence. You cannot, for example, make a claim for a period of 365 days which consists of 183 days abroad followed by 182 days in the UK.

Use the working sheet if you’ve an eligible period of 365 days or more. Follow the steps set out below showing you how to complete the working sheet.

Step 1: Enter in column A the dates you left the UK.

Step 2: Enter in column B the dates you returned to the UK.

Step 3: Work out columns C and D.

Step 4: Is any entry in column D greater than 183? If ‘Yes’, go to step 5. Otherwise, go to step 6.

Step 5: Treat the rows in the table above the entry in column D as a separate table. Rule off and start again. Treat the rows below the entry as a new table. Apply steps 6 to 10 to each ‘separate table’.

Step 6: Work out columns E, F, G and H.

Step 7: If there are any ‘Yes’ entries in column H go to step 8. If there are no ‘Yes’ entries in column H, look at the last number in column E. If that number is 365 or more, you have an eligible period of 365 days or more which runs from the date in column A at the start of your table to the last date in column B. If the number is less than 365, the deduction is not due. Ignore steps 8, 9 and 10.

Step 8: Are there any ‘No’ entries above the first ‘Yes’ entry in column H? If there are, go to step 9. If not, restart the table 2 rows down and continue as if you have a new table. For example, if you arrived at this point with a table starting at A1, ignore rows 1 and 2 and start again at A3, and so on. Go back to step 6.

Step 9: Go to the last ‘No’ entry above the first ‘Yes’ entry in column H. Look at the number in column E on the same row. If the number is less than 365, go to step 10. If the number is 365 or more, you have an eligible period for the deduction running from the start of your table to the date in column B in the row you’ve been looking at in this step. To see whether there are any further eligible periods, go to step 10.

Step 10: Restart the table 2 rows lower and continue as if you have a new table (for example, if you arrived at this point with a table starting at A1, ignore rows 1 and 2 and start again at A3, and so on). Go back to step 6. Finally, look at all the eligible periods you’ve worked out using steps 6 to 10. Enter in box 11 the total of the amounts received during the year ended 5 April 2021 which were:

• from an employment where you worked wholly or partly overseas
• earned during the eligible periods calculated

minus any

• amounts earned from non-seafarer duties including earnings for periods spent working on offshore installations
• contributions to registered pension schemes, allowable expenses capital allowances deductible from the amounts earned during the eligible period

2. More than one employment

If you had more than one employment during the eligible period, and the employments were with the same employer, or with employers who were associated with each other, the deduction may be restricted. If you think this may apply to you, ask HMRC or your tax adviser for help before completing box 11.

3. Records

You should keep your discharge book and all other documents which support your claim. Do not send them with your tax return, but you may be asked to provide them at a later date.

4. Additional information

Enter in the ‘Any other information’ box, box 19 of the SA100 Tax Return on page 7, the names of the ships on which you carried out employment duties in the year ended 5 April 2021.

5. Contacts

For general enquiries contact the Self Assessment: general enquiries helpdesk.

To order Self Assessment forms contact the Self Assessment: forms ordering helpdesk.