Seafarers Earnings Deduction – The Yacht Crew Tax Exemption

Self Assessment Tax Return Form

Are you pondering the different aspects of yacht crew income taxation and how that applies to you?

There is a lot of questions surrounding the Seafarers Earnings Deduction in the UK, especially for those who happen to be employed on ships and in different locations offshore away from the country.

I am sure you may have heard the different angles and misinformation that is commonly out there.

This guide will dispel myths and false information, while sharing with you how to utilise the Seafarers Earnings Deduction and how it may or may not apply to you.

Below is outlined the different details of this bill and how it can help you significantly if you are governed under this tax deduction.

Super Yacht in Port

How to Qualify for SED

The first requirement is that you must be a resident of the United Kingdom.

This means all earnings you gain through your employment aboard a ship are subject to tax under UK law.

If you find that you qualify for this tax exemption, it is a specialised discount entitled to those who are UK citizens employed as seafarers.

This yacht crew tax may apply to you specifically because this deduction was created to help with the competition and expenses associated in the worldwide seafaring industries.

It will be explained further below.

Requirements to be Deemed a Seafarer

To begin with, under United Kingdom laws a seafarer is considered to be an individual who works all of his or her hours on a ship or completes a majority of their work-related tasks on the ship.

Strangely enough, this does not apply to the UK military that spends a great deal of their time in foreign waters, although this may change in the future.

At this moment in time, all military personnel are not eligible for this tax break.

The SED Definition of a Ship

What the Seafarers Earnings Deduction constitutes as a ship is not listed however, examples of what a ship is not are listed.

If you are employed on:

  • a floating production platform
  • fixed floating production platform
  • floating production storage
  • floating storage units, offloading vessels
  • flotels
  • drill-ships
  • jack-up units
  • semi-submersible drilling units
  • mobile offshore drilling units

…then you do not qualify!

If you are employed on any of the above specific rigs then you are not considered a seafarer and cannot apply the Seafarers Earnings Deduction on your self-assessment tax returns.

There are also other requirements as listed below.

In any given working year, you have to begin your voyage while employed from a foreign port or ending your voyage from a foreign trip.

This means that if you leave while employed from the UK, you won’t be covered by this tax law.

If you are employed in gas drilling rigs or oil offshore rigs, you can have your journey covered if you go to a rigging platform that is outside of the United Kingdom and not within UK water areas.

The last component of the SED rules is that you spend over 365 days outside of the United Kingdom going to and from foreign destinations in international waterways.

Once the 365 days have been achieved, you will then be able to benefit from the Seafarers Earnings Deduction.

The only way you could potentially interrupt this is if you were to incur a failure, which could cause you to lose access to the Seafarers Earnings Deduction.

A failure is considered if you spend over 183 days inside the UK or if you break the half day rule and visit the UK.

Every day that is on your claim is added and then divided by 2.

All days that you spend within the United Kingdom are added to that total amount.

If the second amount is larger then the first sum, then you will incur a failure.

A new claim period begins when you depart the UK and it ends when you return.

Money Savings Jar

Be sure to keep all of your records and paperwork and supply them at tax time.

You will need access to your employment records, passports, visas, freeboard logs of ships you were on, airline ticket receipts, travel vouchers, seafarer’s discharge book and also boarding passes too.

Using the Seafarers Earnings Deduction is incredibly invaluable and helps with the worldwide marketplace of the seafaring industry for UK citizens.

It can offer you a massive discount on your taxes and give you a large portion of it back.

Be sure to talk to a specialist yacht crew tax accountant that can explain the full details and whether or not the Seafarers Earning Deduction applies to you.

A yacht crew tax specialist will be your best advisor but if you understand that these specific rules apply to you as a yacht crew person then by all means, find out how you can get this deduction for your benefit.