INTRODUCTION

British seafarers have been covered by special tax rules for decades - because they are often out of the country for long periods, they work in a highly competitive labour market, and because of the requirement for a supply of seafarers for strategic defence needs.

For some time, seafarers were covered by income tax concessions that were available to all members of the public who worked overseas for substantial amounts of a tax year.

That changed in 1984, when the government radically revised the provisions governing entitlement to concessions. This move was condemned by the shipping industry, and after four years of lobbying by maritime unions and ship owners, the 1988 Finance Act introduced an amendment that enabled more seafarers to be eligible for 100% deductions.

Three years later - following a series of problems in securing sufficient UK ships and seafarers to transport military equipment to the Gulf after Iraq invaded Kuwait - the 1991 Finance Act brought in further improvements to tax rules for seafarers, effectively doubling the period (to 183 days) that seafarers were able to spend in the UK.

Announcing the decision in the House of Commons, the then Chancellor - Norman Lamont - stated:

'The Gulf hostilities have reminded us of the important contribution which our Merchant Navy can make to our defence. I recognise that there is a strategic case for measures to encourage shipping companies to draw their crews from seamen in the UK who would be willing and able to serve in time of war.'

The '183-day rule' was welcomed by the industry as a useful measure that would help safeguard the employment and training of British seafarers and bring the UK seafarer tax regime in line with other maritime nations.

In May 2012 Nautilus won a crucial legal battle with HM Revenue and Customs over the rules for claiming seafarers’ income tax concessions. In the important test case, a High Court judge upheld the Union’s arguments that members serving on two ferries had a ‘legitimate expectation’ that they were entitled to the Seafarers’ Earnings Deduction.

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