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Seafarers Earnings Deduction

Seafarers Earnings Deduction

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I have a client who has an eligible period and is a seafarer, so the question is about what earnings can be claimed as a deduction.

As far as I can see from reading the legislation itself and the HMRC manual, it seems that salary for a 3 week voyage which starts in Aberdeen and ends in Aberdeen is treated as not foreign earnings and therefore does not get SED.

A 3 week voyage which starts and ends in Aberdeen but has a provisioning stop-over in Stavanger however is treated as 2 voyages which either start or end in a foreign port and therefore do qualify for SED.

Seems a little unbalanced, but clear enough from the legislation and the HMRC Manual.  

Problem is my client seems to think that as long as he has one foreign port call in the tax year, then all his earnings in the eligible period in that tax year qualify for SED, and that all his colleagues on supply ships actually have that term written into their contracts that there will be at least one foreign port call per tax year which will then enable them to claim the deduction.

Can anyone shed light on this, as my client seems a bit miffed that I treat him more harshly than all his mates.  He's a big lad, and I really dont want to upset him...

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By Helen Crowley
08th Mar 2011 15:04

Agree with you - I think!

I don't see how your clients colleagues can claim they are outside of the UK for 183 days or more if they only have say 1 week on voyages starting or ending in a Foreign port in a whole tax year. There must be one Foreign port per Employment that's true but they all as individuals must also have the required number of days outside of the UK. I have seen cases where there have been numerous Employments, and in one of them there might only have been one short Foriegn trip in say three months but there were enough qualifying days already banked to ensure that the 183 day rule wasn't broken. This meant that the pay for the whole of the three months qualified for SED. If there had been no Foreign port then the Employment would not have qualified for SED. The examples given in HMRC's Employment Income Manual appear to agree with you also.

Would be nice to be proven wrong though!

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By nkwayne
09th Mar 2011 11:43

updated info

Hi Helen, looks like its just you and me!

Thanks for your comment.

I have had more discussions, and it seems that at least one of the seafarers tax specialists takes the view that there needs to be one foreign port call per employment and then all earnings in that employment qualify for SED (assuming the other conditions about period and type of work are met).

I think that is the view that you expressed, too.

But I cannot see how that works in relation to the actual legislation, which refers to specific voyages.

Have you come across any official pronouncements which cover this at all?



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By nkwayne
09th Mar 2011 14:23

Finally I understand - client right after all

Section 378 (1) (b) says that the deduction is allowed if the duties of the employment are performed wholly or partly outside the United Kingdom.


Section 379 (1) (a) says the deduction is … is allowed from the amount of the earnings from the employment…, and same section (1) (b) says it is equal to that amount.


So it is correct that if there is a voyage which starts and ends in a foreign port during any part of an employment then the duties are partly performed outside the UK and the whole of the wages in that employment (which fall into an eligible period) qualify for SED.

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By JamesPerman
03rd Jul 2013 17:12

What about s380?

While I agree that a seafarer will need to visit at least one foreign port to get any SED whatsoever for the year, I don't think this means that he gets SED for the entire earnings.

If we look at s 380 it says that the amount of earnings is limited to:

'the proporation of the aggregate earnings for that year from the employment as a searfrer...that is reasonable having regard to-

the nature of and time devoted to the duties performed outside and in the United Kingdom and all other relevant circumstances.'

If he works out of Aberdeen on oil-rig stand-by in the UK sector, returning to Aberdeen, he may have a 365 day qualifying period by being outside the 12 mile limit for virtually all of each voyage. He does not have any voyage starting or finishing at a foreign port and S 382 deems the duties of each of these voyages are performed in UK. If he has one voyage Aberdeen -Stavanger- Aberdeen for say 2 weeks and the rest of the year is Aberdeen-Aberdeen voyages of 28 weeks worked in the year, then the portion of the earnings for S 380 is the ratio of days on the A-S-A voyage to the days on the other A-A voyages. IIn that way he only gets SED for the one voyage, A-S-A. and the SED is 2/30 of his earings for the tax year.

This is the way we have always done it, what does anyone else think?


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By Ange
25th Aug 2013 18:48

Eligible Period
When you take into account that the contintinental shelf is considered to be within the UK for the purpose of SED I can't see how someone on a standby boat can meet the day count. To be clear, it is my understanding that any day spent on the continental shelf (where the north sea oil rigs are) is considered as a day working in the UK.

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By JamesPerman
23rd Oct 2013 14:36

Out UK

The seafarer is 'out UK' for the purpose of the day-count if he is outside the 12 mile limit. However is he is outside the 12 mile limit and does not call at a foreign port the earnings are deemed to be earned in UK.

So,he can pass the 183 day test by being on stand-by at a rig in the UK sector, but does not have any earnings which qualify for SED.

The tests for the day-count and the earnings deduction sre not the same.

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