Learn how to claim Seafarers Earnings Deduction (SED), including setting up your self-assessment record and understanding qualifying days.

Claiming Seafarers’ Earnings Deduction can significantly reduce your tax liability if you qualify. Below, we break down the process, eligibility criteria, and essential considerations. We’ve also linked the HMRC page on SED for further details.

Eligibility Criteria

To qualify for SED, you must complete an eligible period (EP) of at least 365 days, primarily days absent from the UK. You can determine your eligibility by reviewing your qualifying days outside the UK.

Head over to our other article that provides a deeper understanding of SED & the eligibility criteria –

Understanding Seafarers Earnings Deduction (SED): A Guide for Maritime Clients – Whittaker & Co

Steps to Claim SED

Step 1: Register for Self-Assessment
Begin by registering for a self-assessment record with HMRC and obtaining a Unique Taxpayer Reference (UTR). This number is essential for submitting tax returns and declaring your SED income.

Step 2: Understand Qualifying Days

• Definition: Qualifying days are those spent outside the UK at midnight, beyond the 12-mile limit. For example, if a vessel departs a UK port and returns to another UK port, it only qualifies if it crosses the 12-mile limit at midnight.
• Acceptable Days of Absence: Workdays, holidays, and courses outside the UK count towards your claim. There’s no restriction on the number of holidays included in the calculation.

Step 3: Maintain Accurate Records

To support your SED claim, retaining documentation for at least seven years is essential, as this is the period HMRC can investigate any claims. The following records should be kept:

• Discharge book
• Flight confirmations
• Accommodation booking confirmations
• Receipts
• Payslips or bank statements
• Seafarers contract

Maintaining a log of your days in and out of the UK is also vital, as you will need to present this when making a SED claim.

Key Considerations

1. Exceptional Circumstances Are Not Accepted
   It’s important to note that HMRC does not accept exceptional circumstances, including COVID-19 if you fail to meet your required days outside the UK. However, if you have completed your 12-month qualifying period, any income earned up to the failure point will still be considered SED income.

1. Tax Codes for Seafarers
   You may request an NT tax code, allowing your employer to pay wages without deducting tax. To qualify, you must:
   • Be a UK resident and a PAYE employee.
   • Work as a seafarer aboard a recognised ship for SED purposes.
   • Hold a 12-month employment contract (or six months with the same employer if continuous).

Note: HMRC issues NT codes after your first SED claim is processed. If you’re ineligible, any underpaid tax must be repaid in full.

1. Important Dates
   • Tax Year: Runs from 6th April to 5th April.
   • Eligible Period Start Date: Begins on the date of your first maritime transit.
2. Time Limits
   There are strict time limits for making a claim. Check the HMRC guidance linked below for specific deadlines.

Maintaining SED Status Beyond the First Year

After completing your QP, your days continue to roll forward. If you stop working in the maritime industry or return to UK-based work, ensure you have met the day count requirements before switching.

Need Assistance?

Whittaker & Co provides comprehensive support for maritime employees claiming SED, simplifying the process and ensuring compliance with HMRC regulations. Please get in touch if you have any questions. 

Seafarers Earnings Deduction: tax relief if you work on a ship – GOV.UK

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