Seafarers’ earnings deduction

Produced by a Tolley Employment Tax expert

Employment Tax

Guidance

This guidance note sets out the conditions for workers on board a ship to obtain a 100% deduction from UK employment income for income tax, where work is partly or wholly overseas. The national insurance position is also considered.

See also Checklist ― seafarers’ earning deduction.

Working on board a ship, conditions for claiming seafarers' earnings deduction

Individuals who are employed on a ‘ship’ may claim a 100% deduction from UK earnings for income tax, where duties are performed wholly or partly outside the UK, during an eligible period.

The deduction is usually referred to as the seafarers’ earning deduction (SED). The conditions are rigorous and are subject to anti-avoidance provisions. As will be seen below, the definition of seafarer is wide and can cover, for example, entertainers working on board a cruise ship.

The definition of ship for SED excludes oil and gas exploration, and has implications for divers, especially where work may be within the UK continental shelf (see working as an employee on board a ship, below).

The SED will be considered under the

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