Seafarers Earnings Deduction

How to find out whether the Seafarers Earnings Deduction applies to you

We at DSR Tax Claims know how difficult it can be to get good quality information about tax and expenses on the internet and that is why we want to make life easy for you with our series of handy guides. After all, you probably have better things to do with your free time than trawling the internet for information that should be there at hand for you. And things get complicated when tax is involved so let our team of tax experts walk you through the area of Seafarers Earnings Deduction. If you get to the end of our guide and you still have questions then call our friendly team on 0330 122 9972 and let our expert knowledge sort you out.

What is the Seafarers Earnings Deduction?

Seafarers Earnings Deductions (SED) is a piece of HMRC legislation designed to allow people who work on ships to claim 100% tax relief on their foreign earnings. It sounds simple enough but it can be tricky to work out whether you qualify for it and what HMRC designate as a ship – or whether you are entitled to a tax refund instead of SED.

HMRC state that to qualify for SED, you must have:

  • Worked on a ship.

  • Worked outside the UK for a long enough period to qualify for the deduction, usually a minimum of 365 days.

  • Been a resident in the UK or resident for tax purposes in a EEA (European Economic Area) state other than the UK.

They state that you aren’t entitled to 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.

All sounds simple enough doesn’t it? Except that it isn’t because the HMRC has various regulations on what actually constitutes a ship. Offshore installations do not count as a ship for SED purposes. This means that if your vessel is used for “relevant purposes” and is stationed for over five days then it can’t be classed as a ship. And what are relevant purposes? In this instance, it means that the vessel can’t be used to explore or exploit mineral resources; be used for gas storage or recovery; be used to transport anything via way of a pipe; be used to house any personnel who do any of the aforementioned activities or be used as a flotel. If it does any of these, it can’t be classed as a ship.

And to make matters even more confusing, “stationed” doesn’t actually need to mean anchored!

if you are not sure if you qualify (and who could blame you for not being sure), call our team of experts on 0330 122 9972 and we will help put you straight.

If you do qualify, how do you claim SED?

If you do meet HMRC’s qualifying standards and are a UK resident, get in touch with DSR Tax Claims and we will help you claim your SED. Call us on 0330 122 9972 to get the process started.

What information will you need?

HMRC guidelines state that you will need the following information to support your SED claim:

  • A completed working sheet HS205.

  • Air tickets or other travel vouchers

  • Hotel bills and accompanying receipts

  • Passports and visas

  • Your seafarer’s discharge book

  • The freeboard logs of the ships you have carried out your duties on.

HMRC may contact your employer to confirm these details but DSR Tax Claims can help you deal with HMRC as part of our client service.

Is there anything else you should know?

You can backdate your claim for up to four years so contact DSR Tax Claims now to get started on your claim – don’t leave it too late. Our friendly team can guide you through the process so give us a call on 0330 122 9972 and let us get you your maximum rebate fast.

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