Working on a ship – Seafarers Earnings Deduction
There is a special deduction for people who normally live in the UK but work onboard a ship. The deduction is called the Seafarers’ Earnings Deduction. This deduction permits 100% of onboard earnings to be free of UK income tax.
Your work does not have to be directly related to seafaring, you could for example be a musician, entertainer or cook. Anyone who is employed onboard a ship is eligible if they meet certain conditions.
Exclusions
This deduction does not apply to Crown Servants such as members of the Royal Navy. Nor does it cover work on oil rigs or other offshore installations, as these are not ships for the purposes of this tax deduction. Cargo vessels, tankers, cruise liners, and passenger vessels all qualify as a ship, so workers on these could be eligible.
Qualifying conditions
There are a few conditions that must be met, primarily that the earnings must relate to a qualifying period of at least 365 days. This does not mean that you need to be onboard a shop for a year without coming ashore in the UK. It means that you have to look at a period of 365 days and be careful about returns to the UK during that 365 day period. The qualifying period does not need to cover a tax year.
To be eligible for the Seafarers’ Earnings Deduction you must be resident in the UK for tax purposes.
For more details see http://www.hmrc.gov.uk/incometax/relief-ship.htm.
Non-EEA resident seafarers
If you are not a UK or EEA resident, but have paid UK income tax on seafaring earnings, you may be able to claim a refund – see https://www.gov.uk/government/publications/income-tax-non-resident-merchant-seafarer-repayment-claim-r43m
