Seafarers Earnings Deduction (SED) is UK tax legislation which allows genuine seafarers to claim a 100% tax exemption for their foreign earnings.
This allowance was brought in back in 2012 but many fail to claim for is many accountants either don’t know about it or don’t know how to calculate it.
To be able to qualify for SED, there are various key tick boxes that you must satisfy:
- You must be an employee onboard a ship
- You must visit at least one foreign port during each employment
- You must establish a qualifying period by spending at least 183 days outside of the UK
- You must be a resident of UK or a European Economic Area (EEA) State
But you will not qualify for the deduction if you:
- Are a Crown employee (for example, a Royal Navy Sailor or a Border Force Officer)
- Are not a UK resident or a resident of an EEA State
- Have not been away from the UK for long enough
- Break the “half-day” rule or spend more than 183 days in the UK
So lets break this down to look at each and see if you qualify. We will focus on the main bell curve of clients who work away on ships. Contact tax@callan-group.com with any other specifics you may have.
- You must be based on a ship. The term ship isn’t generally defined in law but covers various ships. It should be noted it doesn’t cover many areas of the Oil industry
- You must visit at least one foreign port to allow SED to be claimed and that the journey begins or ends in a foreign port
- You must have a qualifying period which is 365 days. Of these 365 days you must be ‘out’ for 183 days. That is deemed to be at midnight. You have limits on the maximum number of days you can return for
- You must be resident in UK
HM Revenue and Customs (HMRC) may want to check your claim, so you must keep details including:
- a completed working sheet HS205
- air tickets or other travel vouchers
- hotel bills or other receipts
- passports and visas
- seafarer’s discharge book
- freeboard logs of the ships you carried out duties on
Feel free to drop us any questions you have by email to Brendan Kelly at tax@callan-group.com for a personalised assessment of your status.
