Seafarer’s Earnings Deduction (SED)

Seafarer's Earnings Deduction

If you are a UK tax resident and employed aboard a ship operating outside UK waters you may qualify for a reduction in the amount of your income that is subject to UK tax.

This is known as the Seafarer’s Earnings Deduction (SED); any claims for the SED must be made in a Self-Assessment Tax Return.

The three steps required to decide whether you have a claim, are:

1. A valid claim period

This means a period of at least a year (365 days) beginning and ending with a period outside the UK.
Seafarer’s Earnings Deduction (SED). A period outside the UK can be;

  • a period of employment;
  • a period of unemployment, or;
  • a holiday abroad.

Once a valid claim period is attained it carries on until there is a failure. A failure occurs if, during the claim period, you;

  • Spend 183 or more continuous days in the UK; or,
  • Break the half-day rule (see below).

The half-day rule is applied at each return to the UK.

  • All days since the start of the claim are added together, then divided by 2 (A);
  • All days spent in the UK since the start of the claim are added together (B);
  • The two figures are compared;
  • Where B exceeds A there is a failure in the claim period.

A claim period ends on the previous return date.

Once a claim period ends, a new claim period commences from the earliest possible date you leave the UK.

2. A valid foreign port for each employment in each tax year

Each employment in each tax year must include at least one voyage or part voyage that begins or ends at a foreign port.
Seafarer’s Earnings Deduction (SED).
A voyage, or part voyage, that begins or ends at an oil or gas installation (including a rig in drilling mode) located outside the UK and outside the designated areas of the UK continental shelf can be regarded as beginning or ending at a foreign port for this
purpose.Seafarer’s Earnings Deduction (SED).

3. The employment must be on board ships

A seafarer is someone that works on a “ship”. There is no definition of a “ship” in tax law but “offshore installations” are specifically not regarded as ships.

Initially, to see whether you may qualify for a reduction in the amount of your income that is subject to UK tax, click on Seafarer’s Earnings Deduction (SED).

Seafarer’s Earnings Deduction (SED)
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