Seafarers Earnings Deduction

Seafarers Earnings Deduction (SED) is a piece of tax legislation that exempts Seafarers from paying income tax on overseas earnings. Basically, the Seafarer can claim 100% tax relief on the amount you earn.

Who Qualifies?
The deduction is available to employees who are UK residents and to non-UK residents who are resident in an EU or European Economic Area (EEA) state. EU or EEA residents who wish to claim the deduction should submit form R43M(SED) to HMRC to reclaim tax deducted under PAYE.

You can qualify for the deduction if you:
• Perform all your duties on a ‘ship’
• Perform most of your duties on a ship, and the other duties are incidental to the duties on the ship
• Have worked outside of the UK long enough to qualify for the deduction – usually a minimum of 365 days
• Have been resident in the UK or resident for tax purposes in an EEA state other than the UK

You cannot get the deduction if you were:
• A Crown employee (for example, a Royal Navy sailor)
• Not a UK resident
• Not a resident of an EEA state (other than the UK)

Offshore Installations are not regarded as ships, (these are as follows)
• Fixed production platforms
• Floating production platforms
• Floating storage units
•Floating production storage and offloading vessels
• Mobile offshore drilling units (drillships, semi-submersibles and jack-ups)
• Flotels

Eligible Period

• You cannot make your first claim until 365 days have passed
• No single return visit lasts for more than 183 consecutive days
• The total number of days you’ve spent in the UK is not more than one-half of the total number of days from your first day abroad to the last day of the period you spent abroad after that return visit. (this is known as the half day rule)

Just to note that if the half day rule is broken, then the eligible period must be restarted.