Seafarers’ earnings deduction

The seafarers’ earnings deduction lets an employee working on a ship deduct all of the earnings from that seafaring employment that relate to an eligible period of at least 365 days spent mainly outside the UK. It is a deduction under sections 378 to 385 of the Income Tax (Earnings and Pensions) Act 2003, not an exemption, and it is claimed on the Self Assessment return. Work on offshore installations and most Crown employment never qualifies.

Who can claim the seafarers’ earnings deduction?

Section 378(1) ITEPA 2003 allows the deduction from earnings from an employment as a seafarer if three conditions are met: the earnings are relevant general earnings, the duties of the employment are performed wholly or partly outside the United Kingdom, and some of those duties are performed in the course of an eligible period. HMRC’s Employment Income Manual at EIM33001 stresses that the tests are applied separately, and that a seafarer with more than one seafaring employment must meet them for each employment on its own.

In practice the claimant must be UK resident, or resident for tax purposes in a European Economic Area state other than the UK. EEA resident seafarers have been able to claim since 6 April 2011, but only against the earnings that are taxable in the UK, which are their earnings for seafaring duties performed in UK waters. A seafarer who is resident neither in the UK nor in an EEA state cannot claim.

Section 384 defines employment as a seafarer as an employment consisting of duties on a ship, or of such duties and others incidental to them. Crown employment is excluded, so a Royal Navy sailor cannot claim. Since 15 March 2018 the Royal Fleet Auxiliary Service has been carved out of that exclusion, so its employees can qualify if they meet the other conditions.

What counts as a ship, and what is excluded?

Ship is not defined, but helpsheet HS205 explains that oil and gas offshore installations are not ships. HMRC’s examples include fixed and floating production platforms, floating storage units, floating production storage and offloading vessels, mobile offshore drilling units such as drillships, semi submersibles and jack ups, and flotels. Any vessel exploiting mineral resources by means of a well while standing or stationed in any waters is an offshore installation.

Earnings for duties on an offshore installation anywhere in the world do not qualify, and HS205 makes clear that this includes periods when the structure is moving between locations, has temporarily changed its use or has temporarily been taken out of use. Claimants must therefore name their ships in the “Any other information” box of the SA100 return.

When are duties treated as performed outside the UK?

Section 382 has its own location rule. Duties on a ship count as performed outside the UK if they are performed on a voyage, or part of a voyage, that begins or ends outside the UK, ignoring any part that both begins and ends in the UK. A voyage that does not extend to a port outside the UK is treated as performed in the UK, and the designated areas of the continental shelf, which include the UK sector of the North Sea, are treated as part of the UK.

EIM33033 gives the example of a trawler crew who sail from a UK port to fishing grounds near Iceland and return to the same port. They do not qualify, because the whole voyage begins and ends in the UK. If the trawler docks in Iceland to unload, the legs to and from the Icelandic port are treated as performed abroad. The general “merely incidental duties” rule in section 39 does not apply to this deduction (EIM40203).

How is the 365 day eligible period worked out?

Under section 378(2) an eligible period is at least 365 days and is either a run of consecutive days of absence from the UK or a combined period. Section 378(3) defines a combined period as one in which at least half of the days are days of absence, made up of three consecutive periods A, B and C, where A is a run of absence (or itself a combined period), B is a period of not more than 183 days and C is another run of absence. Because A can itself be a combined period, several home visits can sit inside one eligible period.

A day counts as a day of absence only if the seafarer is outside the UK at the end of the day, which HMRC reads as midnight following Hoye v Forsdyke. In general the day of departure counts as a day of absence and the day of return does not. This midnight test is separate from the voyage rule above: section 382 decides where duties are performed, but only physical location at midnight decides days of absence.

UK days only count if they fall between periods of absence, so 183 days abroad followed by 182 days at home is not an eligible period. HS205 includes a working sheet that applies these rules row by row.

How much is deducted?

Section 379 sets the deduction equal to the earnings from the employment attributable to the eligible period. Section 381 requires certain deductions to come off first, broadly registered pension contributions, allowable expenses and capital allowances, so that the deduction then removes all of the remaining earnings for the eligible period from charge. EIM33002 confirms there is no need to separate UK and foreign duties performed within the eligible period. Earnings for parts of the tax year outside the eligible period stay taxable in the normal way.

The deduction works only against general earnings. EIM33001 confirms it cannot be set against share option gains, which are specific employment income, and that it applies for income tax only. National Insurance follows its own mariners’ rules.

Section 380 lets HMRC restrict the deduction where a seafarer has associated employments and earnings appear to have been shifted into the one with overseas duties, although EIM33071 accepts that higher pay for overseas work can be commercial.

Worked example

Illustration only. Dan, a UK resident engineer on a cargo ship, leaves the UK on 1 May 2025 and returns on 1 December 2025, giving 214 days of absence from 1 May to 30 November. He spends 39 days at home, then leaves again on 9 January 2026 and returns on 30 June 2026, giving another 172 days of absence from 9 January to 29 June.

Period	Days	Treatment
A: 1 May to 30 November 2025	214	Absent at midnight
B: 1 December 2025 to 8 January 2026	39	UK days, under 183
C: 9 January to 29 June 2026	172	Absent at midnight
Total	425	386 days absent, more than half

The combined period of 425 days is at least 365 days, the home visit is under 183 days and more than half the days are days of absence, so Dan has an eligible period from 1 May 2025 to 29 June 2026. His 2025 to 2026 claim covers his net earnings from 1 May 2025 to 5 April 2026. His April 2025 pay is outside the eligible period and stays taxable. The part from 6 April to 29 June 2026 is claimed on his 2026 to 2027 return.

How do you claim, and can tax be stopped at source?

A UK resident seafarer must register for Self Assessment and file a return. The 2026 edition of HS205 says the deduction goes in box 11 on page Ai 2 of the Additional information pages. EEA residents claim a repayment on form R43M(SED) instead. GOV.UK’s table of time limits shows each claim due by 5 April four years after the end of the tax year concerned, so the 2018 to 2019 claim had to be made by 5 April 2023.

HMRC can authorise the employer to pay wages without deducting tax by issuing code NT. GOV.UK lists the conditions: the seafarer must be UK resident, in a PAYE employment, working on a vessel accepted as a ship, filing a Self Assessment return each year, and have a contract of at least 12 months, or otherwise at least 6 months of continuous employment with the same employer working outside the UK. HMRC will not issue the code until it has processed the first claim, and the request is made on form R44. The code is provisional: HMRC must be told at once if the employment ends or changes, and tax underpaid because the code was not due is recovered in one lump sum. For how codes work generally, see our guide to PAYE tax codes.

What goes wrong when HMRC checks a claim?

HMRC may ask the employer to confirm voyages and crew, so keep the HS205 working sheet, air tickets or travel vouchers, hotel bills, passports and visas, the seafarer’s discharge book and the freeboard logs of the ships served on. Common errors include:

• including weeks on a drilling unit or flotel, which are offshore installations even when the claimant thinks of them as vessels
• counting the day of return as a day of absence, which can push a marginal period under 365 days
• treating coastal voyages between UK ports as overseas duties
• claiming the deduction before subtracting pension contributions and expenses
• assuming the deduction also removes National Insurance or share option gains
• keeping an NT code running after the contract changes

Errors can be corrected by amending a tax return, late returns attract the usual Self Assessment penalties, and enquiries follow the pattern in what happens in an HMRC compliance check.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

• Overseas workday relief
• Tax on director fees from an overseas company
• Returning to the UK: a tax checklist
• The statutory residence test
• Non resident directors: PAYE and NT codes

Sources

• GOV.UK: Manual page EIM33000
• legislation.gov.uk: Act 2003 c. 1, section 378
• GOV.UK: Manual page EIM33001
• GOV.UK: Hs205 seafarers earnings deduction 2026
• legislation.gov.uk: Act 2003 c. 1, section 384
• GOV.UK: Manual page EIM33033
• GOV.UK: Manual page EIM40203
• GOV.UK: Manual page EIM33004
• GOV.UK: Manual page EIM33002
• GOV.UK: Manual page EIM33071

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.