“Do seafarers pay tax?”, “What’s a seafarers self-assessment tax return?”, and “What’s the Seafarers Earnings Deduction”?
Whether or not you’re simply beginning out as a yachtie or have years of expertise crusing on board superyachts, seafarers’ finance is usually a difficult topic. You’re sure to have questions on your funds and taxes – however don’t fear, assistance is at hand!
On this weblog, we’ve gathered collectively your most incessantly requested finance questions, so you’ll be able to have all of the solutions you want in a single place. So, learn on for solutions to all your yachtie finance queries…
Your superyacht crew finance questions answered
Do seafarers have to pay tax?
Beginning off with some of the frequent questions we’re requested, the reply is not any, there isn’t any tax to be paid with regard to your revenue from employment at sea (offering you meet the standards).
The Seafarers Incomes Deduction is a bit of tax laws that enables overseas earnings to be exempt from UK revenue tax – so you’ll be able to declare 100% tax aid on the quantity that you simply earn at sea in case you are eligible.
What about nationwide insurance coverage?
Sure, seafarers do pay nationwide insurance coverage – though the cost of your NI contributions does rely on a number of elements, resembling the place you might be legally a resident in addition to the place your vessel is registered to.
As well as, the place you’re employed may even be thought-about, alongside along with your employer, their location, and the job you undertake. The situation of the proprietor of the vessel may even be seemed into, as will whether or not you’re employed inside or exterior of UK waters.
Lastly, any agreements between the UK and different nations may even be thought-about as nicely. See, we advised you seafaring finance was sophisticated!
So, what’s the Seafarers Earnings Deduction?
As we stated above, the Seafarers Earnings Deduction is a tax laws which might allow seafarers to assert 100% tax aid on the quantity they earn.
After years of battles between commerce unions and HMRC, the laws got here into impact in 2012, primarily as a result of seafarers spend a lot time at sea, they don’t profit from providers that revenue tax helps the federal government pay for, such because the NHS, training, and infrastructure.
Sadly, although, many seafarers and superyacht crew nonetheless don’t use the SED exemption – almost definitely because of an absence of training about whether or not or not they’ll – and are lacking out on their earnings due to it.
How do I do know if I qualify?
The three primary guidelines to qualify for SED are that you should have labored exterior the UK for one year, your qualifying interval has at the least one voyage that begins and ends at a overseas port, and that you simply work on a ship. Right here’s a proof of the qualifying standards in additional element:
1. You’ve labored exterior the UK for the qualifying interval
To qualify for SED, you should have labored exterior the UK for a interval of one year. As quickly as this 365-day interval has been attained and confirmed, it’s carried on till there’s a ‘failure’.
A failure happens if at any time throughout the declare you spend 183 days or extra within the UK or break the ‘half-day rule’.
The half-day rule is one thing that’s utilized upon every return to the UK. All days because the begin of the declare are added and divided by 2 (A). Then all days spent within the UK because the begin of the declare are added (B). These two figures are in contrast, and the place (B) exceeds (A) there might be a failure within the declare interval.
2. Every qualifying interval has at the least one voyage that begins and ends at a overseas port
Every employment in every tax 12 months should embody at the least one voyage or half voyage that begins or ends at a overseas port. This features a voyage that begins or ends at an oil or fuel set up situated exterior the UK and out of doors the designated areas of the UK continental shelf.
3. You’re employed on a ship
To be certified as a seafarer, you clearly should work on a ship. It’s vital to notice that offshore installations are usually not thought to be ships, and neither are fastened manufacturing platforms, floating manufacturing platforms, cell offshore drilling models, or flotels.
Crown staff are additionally not eligible to assert SED until they’re staff of the Royal Fleet Auxiliary.
What’s outlined as exterior the UK for SED?
Beneath typical circumstances, HMRC appears at being exterior the 12-mile restrict as being exterior of the UK. Nevertheless, they’ll settle for that the place a vessel leaves its UK berth earlier than midnight and go to a overseas port – that’s seen as a time out.
If a vessel was to sail from a UK port to a different UK one, then it is just when it’s exterior of the twelve-mile restrict at midnight that it’s thought to be exterior of the UK.
I’m a resident exterior of the UK – can I declare the seafaring allowance?
If you’re not a resident within the UK however are resident in an EEA State, it’s possible you’ll be entitled to assert Seafarers Incomes Deduction because of adjustments constituted of the 2011-12 tax 12 months.
So as to take action, you should full a R43M kind slightly than a tax return. If you’re a non-UK and non-EEA resident seafarer however pay tax to HMRC, you could possibly declare the tax again too.
Does dry-docking of a vessel have an effect on a declare?
Sadly, sure, it’s doable for a ship in a dry dock to be seen as not being a ship for tax functions by HMRC. When a vessel is in a dry dock, it could actually nonetheless be thought to be a vessel.
Nevertheless, if the hull of the vessel is breached, it then ceases to be a ship – so it’s very important to maintain HMRC knowledgeable in case your ship is working underneath these sorts of circumstances.
What number of days’ vacation might be included in my declare?
As many as you need! There isn’t a set restrict; all that issues is the variety of days spent away from the UK.
Are there deadlines for claiming Seafarers Earnings Deduction?
Sure, there are deadlines for claiming SED. Claims for the 2017/18 tax 12 months will need to have been claimed by fifth April 2022, claims for the 2018/19 tax 12 months should be claimed by fifth April 2023, claims for the 2019/20 tax 12 months should be claimed by fifth April 2024, and so forth.
What’s the seafarer’s self-assessment tax return, then?
Self evaluation is without doubt one of the programs that HMRC makes use of to gather revenue tax. Tax is often deducted mechanically from wages, pensions, and financial savings, however in case you are self-employed, you should full a tax return annually and HMRC will then calculate the quantity of tax you owe.
How do I full it?
If you’re a UK resident with one year of qualifying work on a ship, the very first thing you should do is register to your self evaluation tax return.
As a way to full your seafarers tax return and declare your Seafarers Incomes Deduction, additionally, you will want a mix of the next data:
- Air tickets or journey vouchers
- Copies of resort payments and receipts
- Your passport and visas
- The freeboard logs to your ship(s)
- Your seafarer’s discharge e-book
What’s a working sheet HS205?
An HS205 kind is just the title of the shape you’ll need to fill in to be able to declare SED. You’ll find the shape on the federal government web site.
When do I want to finish my tax return by?
The time restrict for submitting a tax return is the thirty first of January following the earlier fifth April, which supplies you 9 months to finish and submit the return. As a way to assure that your return might be submitted in time, it’s suggested that you simply ship all the main points to your return by mid-December.
What occurs if I don’t full it?
Sadly, you’ll be able to face vital penalties and monetary repercussions when you don’t full your kind accurately or on time.
In the event you submit your tax return as much as three months late, you’ll should pay a effective of £100 – even when your SED exemption means you shouldn’t have any tax to pay.
After three months, HMRC can then impose a further £10 effective for every additional day that you simply don’t submit your return for as much as 90 days – which suggests you can find yourself with a further £900 invoice on prime of your preliminary effective.
In the event you nonetheless don’t submit your return after this, you’ll be even larger fines. Basically, the longer you allow it, the more serious the penalties develop into – so be sure you full your seafarer’s tax return and file it on time!
Ought to I take advantage of a tax specialist?
Not finishing your tax return or doing so incorrectly will come again to chew you someday in your life. As a substitute of paying nothing, you could have to pay the total revenue tax of your earnings and probably a effective on prime – so when you’re uncertain, it’s all the time finest to make use of a tax specialist that will help you out.
Right here at Flying Fish, we run a seafarers tax service for all UK crew. For £210 per 12 months, we’ll full your tax return and ensure it’s finished accurately so that you pay no pointless revenue tax, which is able to prevent a lot cash, time and stress.
Want additional assist and recommendation?
Need to discover out extra about how we can assist? Merely contact our staff right this moment and allow us to deal with your tax worries for you!
