Frequenty Asked Questions on Tax

You may be aware that many UK seafarers are eligible to declare their income from working offshore under the SED without having to pay any tax. For a comprehensive guide on how to qualify to make your claim, follow the link below:

https://marineaccounts.com/seafarers-earnings-deduction.php

HMRC have made it simple to keep track of the number of days you have spent in the UK and confirm that you continue to qualify to claim the seafarer’s earnings deduction through worksheet HS205 which you can download online through the gov.uk website.
As long as you don’t break the number of UK days you are allowed in order to continue to qualify for the SED, you are free to work as you please whilst at home in the UK. Whilst this income won’t qualify to be declared under the SED, your yachting income will.
Yes, whilst these may be cash and might not be recorded by your employer, they should still be included in your tax return.
Not always. Whilst UK seafarers are able to declare their employment income under the seafarer’s earnings deduction, other sources of income may be table. This having been said, you will still have your personal allowance, which was set at £11,850 for the 18/19 tax year, and £12,500 for the 19/20 tax year. This amount can be earned tax free alongside your qualification for the SED.
Following the introduction of the Automatic Exchange of Information in 2014, tax authorities now have the right to request information regarding your income from you bank. Although you may not have a tax liability, HMRC still expect you to notify them of your income and your qualification for the SED through an annual tax return.
These letters tend to be automatically generated as HMRC attempt to encourage people to file their tax return early in order to minimize the back log at the 31 st January 2020 deadline. Whilst you can wait until January, it’s always advisable to begin the process as early as possible.
HMRC have a 4-year audit period so it’s important that you have no undeclared income for the past 4 tax years. If you began working offshore after 6 th April 2015, you should only need to declare your income back to the point at which you first left the UK.
Yes. HMRC have separate departments for PAYE and self-assessment and the two won’t necessarily communicate with each other. For this reason, it’s important that all your earnings for the tax year are included in your tax return.
We try to keep the process of filing your tax returns as simple as possible and we understand it might not always be easy to gather all your documentation. For this reason, we won’t ask you to forward payslips, flight stubs or bank statements but it would be advisable to keep these for your own records.
Interest from an ISA is tax free so it won’t need to be included in your tax return. You can deposit up to £20,000 a year in a cash ISA, Stocks & Shares ISA, Lifetime ISA or Help to Buy ISA and the interest is tax free.
If you are claiming the Seafarer’s Earnings Deduction as a UK resident, HMRC will expect to be notified of all your worldwide income sources so any income received from properties in the UK or abroad should be included in your tax return.
Whilst your rental income can’t be declared under the SED, HMRC will allow you to reduce the taxable amount by deducting costs you have incurred throughout the year. Advice on what expenses can be claimed can be found on HMRC’s website here: https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income#allowable-expenses
Repayments on your student loan are based on your taxable income. If you are claiming the SED your taxable income from employment will be £0 so you won’t need to begin repayments. If you aren’t claiming the SED the Student Loans Company will notify you of the repayments you need to make once you have filed your tax return. For further explanation follow the link to our recent article below: https://marineaccounts.com/news-archive/should-i-be-making-student-loan-repayments-on-my-offshore-income/144
Whilst you’re not obliged to make National Insurance contributions unless working on a UK flagged vessel, you may choose to do so voluntarily in order to increase the amount of your state pension payments. You will need 10 years of contributions by retirement age to receive the basic rate of state pension and 30 years of contributions for the higher rate. If you’d like to make contributions you can do so by completing the Mariners Questionnaire and forwarding to HMRC by post. If you have a gap in your contributions, you may be eligible to back date your contributions for up to 6 years and you’ll need to complete the questionnaire once for each tax year you’d like to backdate for.
If you still have further questions, contact us for advice.