Seafarers' earnings deduction
The measure
The Seafarers' Earnings Deduction, which allows income earned by seafarers to be exempted from UK income tax, will be extended to seafarers ordinarily resident in an EU or EEA country. Previously the deduction was only available to seafarers resident and ordinarily resident in the UK.
The extension of the deduction means that seafarers who are resident in the UK but ordinarily resident in an EU or EEA country may be able to claim a deduction against seafaring income derived from non-UK voyages. The income relating to these duties can thus avoid UK income tax, even if the pay is received in the UK.
Who will be affected?
Seafarers resident but not ordinarily resident in the UK, who are ordinarily resident in an EU or EEA country.
When?
From 6 April 2011.
The deduction has been extended to those ordinarily resident in the EU and EEA in order to comply with the EU Treaty. Some seafarers who are resident but not ordinarily resident in the UK are currently only able to exclude their income relating to foreign voyages if they claim the remittance basis and receive and keep the income offshore. For many, claiming the remittance basis will result in the loss of the tax-free personal allowance and annual capital gains tax exemption. For these individuals, this is positive news as they may now be able to avoid UK tax on their foreign income even if the income is received in the UK, and preserve their tax-free allowances.
