The Seafarers’ Earnings Deduction is accessible the place sure situations are met and is accessible as a deduction for revenue tax functions solely. It can be crucial that this deduction is accessible just for an Worker and this isn’t out there to self-employed individuals at sea, it’s value noting that this is without doubt one of the uncommon cases that HMRC argue in opposition to standing as an worker.
There have been a number of circumstances the place entertainers on cruise ships are self-employed and never entitled to this deduction from revenue. This was usually decided as they have been offering leisure on engagements with a number of totally different cruise strains in an analogous strategy to actors and so it was self-employment.
Totally different Guidelines apply to find out legal responsibility to Nationwide Insurance coverage contributions.
Who can Declare it?
It’s important to be a seafarer and that is outlined as employment consisting of the efficiency of duties on a ship. HMRC do settle for that not all duties should be on board as long as they’re incidental to the duties which are on board. It is usually accepted that it’s out there to not solely seamen but in addition anybody else who works on board a ship. This implies the time period seafarer contains cooks, entertainers and couriers in addition to divers or painters.
So that you should be employed and meet the next situations
labored on a ship (which excludes offshore installations and there may be some case regulation that considers these info)
labored exterior of the UK, for a minimum of a 12 months (normally three hundred and sixty five days)
been resident of the UK or one other European nation (EEA) for tax functions.
You’ll be able to nonetheless declare the deduction in your seafaring revenue even when you have different jobs. Nevertheless, you will need to meet the above eligibility standards.
You can’t declare the deductions if :
The deduction just isn’t out there to Crown Workers (Civil Servants and members of the Armed Forces), nevertheless, it’s legislated that Royal Fleet Auxiliary workers usually are not handled as Crown Workers and are eligible to say the deduction.
You are not a resident of the UK or an EEA
Maintaining Information for Your Declare
HMRC could request verification in your declare. Here is what you need to preserve helpful:
Accomplished Working Sheet HS205: This official doc helps you calculate your eligibility interval.
Journey Paperwork: Air tickets or journey receipts to doc your actions.
Lodging Receipts: Hold resort payments or any receipts in your stays overseas.
Passports and Visas: These paperwork will affirm your journey historical past.
Seafarer’s Discharge Guide: This official report particulars your employment historical past at sea.
Freeboard Logs: Preserve logs from the ships you labored on, documenting your duties.
Claiming the Deduction
You’ll need to register for Self Evaluation, full a tax return, and provides the main points of your revenue for the tax 12 months you’re claiming the deduction for.
If you happen to weren’t resident within the UK however have been resident in an EEA State you possibly can declare the deduction utilizing type R43M(SED) – Reimbursement Declare – EEA resident service provider seafarer.
NT Tax Code
Your employer pays your wages with out tax deduction, they will do that by working a tax code referred to as NT.
To assert the NT tax code, you will want to fulfill these necessities:
UK Resident: You should be a resident of the UK.
PAYE Employment: Your seafaring job should fall below the Pay As You Earn (PAYE) scheme.
Qualifying Vessel: The ship you’re employed on should be thought of a qualifying vessel for the Seafarers’ Earnings Deduction.
Self-Evaluation: You will have to file a self-assessment tax return every year.
Minimal Contract Size: There is a minimal contract size requirement. You will need to have both: • A contract of a minimum of 12 months, or • Been repeatedly employed with the identical employer for a minimum of 6 months, working exterior the UK.
Vital Duties
Change of Employment: You will need to inform HMRC instantly in case your employment adjustments or ends.
Repaying Underpaid Tax: If it is found you were not entitled to the NT code, you will be required to repay any underpaid tax in a lump sum.
Claiming the NT Code
HMRC will not challenge the NT code till they’ve processed your first declare for the Seafarers’ Earnings Deduction. You may make this declare both:
12 months after beginning your seafaring job, or
In the beginning of the tax 12 months previous the 12 months of declare (whichever comes later).
The right way to Apply?
Use type R44 to formally request the NT tax code from HMRC.
Contact Us
You probably have any questions relating to the Seafarers’ Earnings Deduction or the NT tax code, Breaking the Mould Accounting might help! Our crew of skilled accountants can help you in claiming these advantages and making certain you are compliant with all tax rules.
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