Seafarer’s Earning Deduction and COVID

July 24th 2020

HMRC recently published guidance on the definition and application of ‘exceptional circumstances’ to the COVID 19 pandemic when reviewing residence issues. This brought some hope, but since this there has been no mention of any softening of the approach to Seafarer’s Earnings Deduction claims.

Seafarer’s are potentially significantly affected by COVID, as many of them operate under employment contract but are not paid through PAYE, or if they are, are only paid partially by this method. This has meant that some Seafarer’s have not had the option of being ‘furloughed’. They are also unable to access the Self Employed Income Support Scheme as they are not considered self-employed. They may therefore have very little income coming in over an extended period and yet they will be facing unbudgeted tax bills if their Seafarer’s Earnings Deductions claims fail.

The UK Chamber of Shipping and the RMT are lobbying for the government to extend support on offer to Seafarer’s and potentially relax the rules relating to the deduction claim. HMRC have so far been silent on the issue.

The parliament received a written query in May 2020 from Patricia Gibson, the SNP MP for North Ayrshire and Arran to ask the Chancellor of the Exchequer, what plans he has to ensure continued tax relief for seafarers unable to take to sea due to the covid-19 pandemic.

The answer:

“The Seafarer’s Earnings Deduction (SED) offers a 100 per cent reduction in income tax on maritime employment income for UK and EEA resident seafarers who have a qualifying period of time absent from the UK. The qualifying period must be made up of at least 365 days, but return visits to the UK during that time up to a maximum of 183 consecutive days can count towards the qualifying period. This is among the most generous reliefs available to seafarers worldwide.

The COVID-19 pandemic is an unprecedented interruption to many industries and businesses, and the Government has announced a broad range of support including the Coronavirus Job Retention Scheme, the Coronavirus Self-Employment Income Support Scheme, and mortgage holidays for homeowners and landlords.
The Government will keep all taxes under review.

We have written to HMRC in relation to this issue and received no response. The up to date guidance from HMRC technical advisors is that there is no relaxation of the rules in place, and none planned.”

For any seafarer considering how to maintain their eligible period they should keep in mind that a trip abroad even when not working will maintain the eligible period.

There is petition online for anyone interested :

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