Seafarers' earnings deduction: EU/EEA seafarers - HMRC Change of Practice

The following information has been provided to Nautilus by the UK tax authority HMRC with a request that this be passed on to members who may qualify for seafarers’ earnings deduction (SED) and who are non-UK resident but resident in a European Union (EU) or European Economic Area (EEA) state, who perform duties in UK waters and who have paid income tax in the UK on earnings for these seafaring duties:

Seafarers who perform duties of an employment on a ship partly or wholly in UK waters during an eligible period are entitled to SED to set against earnings for those duties.

Until 5 April 2011 SED was only available to seafarers ordinarily resident in the UK. From 6 April 2011 SED was extended to non-UK resident seafarers who are resident in a European Union (EU) or European Economic Area (EEA) state, who perform duties in UK waters and who have paid income tax in the UK on earnings for these seafaring duties.

The extension in entitlement to SED for 2011/12 onwards to EU/EEA seafarers did not include entitlement for years before 2011/12. Consequently since 6 April 2011 it has been HMRC's practice to refuse claims to SED for years prior to 2011/12 from EU/EEA seafarers.

Change of practice

On 30 March 2012 HMRC announced that it now considers that claims for SED for tax years before 2011/12, by seafarers who were non-UK resident or ordinarily resident in the relevant tax year, should be allowed. Claims must be made within the time limits that apply for making such claims by those who were UK resident or ordinarily resident in the relevant tax year.

Time limits for making claims to HMRC

In view of the date of the announcement of this change of practice close to the end of tax year 2011/12, HMRC will extend by approximately 4 months the time limits for making claims for overpaid tax relating to claims for SED that would otherwise expire on 31 March or 5 April 2012. Accordingly, provided claims are made on or before 31 July 2012, HMRC will consider claims for SED made -

  • in respect of the tax year 2007/08 by a person who was not UK resident or ordinarily resident for that year (whether or not that person's tax affairs were, for that year, determined in accordance with Self Assessment); and/or
  • in respect of the tax year 2006/07 by a person who was not UK resident or ordinarily resident for that year provided that person's tax affairs were, for 2006/07, not determined in accordance with Self Assessment.

The relaxation of the time limits described above does not have effect in relation to any other claim or any other year. Claims relating to SED in respect of the tax year 2008/09 and later tax years must be made within the normal time limits for making claims in respect of such tax years (i.e. within 4 years of the end of the tax year in question - claims for 2008/09 must be submitted by 5 April 2013 and so on).

New guidance

Further details on how to claim can be found  in the HMRC manuals 

  • how to submit a claim to SED;
  • what evidence is required to support a claim; and
  • the years for which claims may be submitted.

How non-UK resident seafarers should submit claims for SED

A separate form R43M(SED) must be submitted for each year of claim for SED. This form can be downloaded from the HMRC website at www.hmrc.gov.uk/forms/r43msed.pdf and submitted to the HMRC address provided on that form. It should be accompanied by the supporting documents .

Further assistance is available from the HMRC Cardiff Marine Office on +44 (0)2920 325045.

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