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Seafarers' 100% deduction

Employees who are resident and domiciled in the UK are generally taxable in the UK on all of their worldwide earnings (arising basis). However, if the employee is a seafarer, they may qualify for the seafarers' earnings deduction (also known as SED).

The seafarers' earnings deduction reduces the amount of the earnings that are chargeable to tax in the UK if the individual is absent from the UK for at least half of the days in a period of at least 365 days¹.

This relief is potentially available to anyone who is employed to carry out their duties on board a ship, so in addition to the ship's crew, it can also extend to entertainers on board cruise liners, catering staff and general maintenance staff².

The detailed rules are described in E4.753. The HMRC guidance on this relief is at EIM33000 onwards.

Some points worth highlighting about the rules, plus a further example, are set out below.

Seafarers' earnings deduction—conditions

In order to qualify for the deduction