Seafarers Earnings Deduction - Tax Advice for Yacht Crew

Eventually the time comes for all yacht crew to address their tax situation and to accept that this is inevitability, not a choice. When I first began filing tax returns in 2008, there was very limited information available online and I used to worry that about the tax bill that I would face at the end of the filing process.

My accountant at the time also didn’t provide me with much information so, when I finally received my completed returns, I was amazed to discover that I had qualified for Seafarers Earnings Deduction (SED) and owed no tax at all. 

Nine years later, there are still so few UK/EU resident crew who are aware of the existence of SED, and that taking advantage of this unique tax position affords significant benefits. There are many reasons for this, but here are some common factors. 

Firstly many crew choose not to file because they get a lot of their information from their peers, who are sometimes ill informed on their own tax positions. This has created a culture within the industry that lends itself to tax avoidance. Specifically it’s a common belief that tax can be avoided simply by choosing offshore banking and attaining non-resident status. In reality, tax can be avoided, but crew need to recognise that the only way of doing so is by filing an annual tax return and claiming the SED.

Secondly many do not realize just how simple it is to sort out their tax situation, fearing that they will be taxed and fined for not having filed earlier. In our experience, only those who have begun the process of filing and then choose to ignore it receive penalties. 

HMRC does a good job of complicating what is in essence a very simple list of requirements! 

To qualify for SED, you need:

• To have worked onboard a yacht for at least one year

• To have spent less than 183 days in the UK in a year

• To be employed and not self employed

• To not have a permanent residence outside of the UK 

You can also backdate returns up to a maximum of 6 years if you have UK sourced income to declare. 

Marine Accounts offers tax return services that are guaranteed to make filing a smooth and painless process from start to finish.

To start the filing process, we will require the following information:

• Number of days spent in the UK in each respective year (We do not require copies of flight ticket stubs or discharge books)

• Amount of money earned in each year

• Your employer or management companies address 

Once you have provided the above information we can complete your tax returns and put your mind at ease.

Another huge advantage is that once you have filed, mortgages and other financial services will become much easier for you to access. We’re always amazed by the number of clients who come back to us after filing their tax returns and question why they waited so long. 

If you think you meet the criteria for the SED, or would like more information please contact us at contact us - our initial consultation is free of charge. 

Any advice in this publication is not intended or written by Marine Accounts to be used by a client or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party matters herein.

*Image credit (social): CC BY-SA 3.0 Nick Youngson