If you work at sea and want to reduce your UK tax bill, you first need to qualify as a UK tax resident to use the Seafarers’ Earnings Deduction (SED) scheme.
How do you know if you’re a UK resident for tax purposes?
Your tax residency status is determined by the Statutory Residence Test (SRT), which assesses your ties to the UK and the time spent there.
Introducing the Statutory Residence Test (SRT)
The SRT is used by HM Revenue & Customs (HMRC) to decide if you count as a UK resident for tax purposes. The SRT will look at your time spent in the UK and how many links (HMRC call it ties) you have to the UK.
SRT consists of three parts:
1. The Automatic Overseas Test
A seafarer is not a UK resident if they meet any of these conditions:
- They were UK residents in one or more of the last three tax years but spent fewer than 16 days in the UK in the current tax year.
- They were not UK residents in the last three tax years and spent fewer than 46 days in the UK in the current tax year.
- They worked full-time overseas (not as a seafarer) and spent fewer than 91 days in the UK during the tax year, of which no more than 30 days were spent working.
If any of the above applies to you, you are not classed as a UK resident, meaning you cannot claim SED because it is only available to UK residents.
2. The Automatic UK Residence Test
A seafarer is automatically a UK resident if they meet any of these conditions:
- They spent 183 days or more in the UK during the tax year.
- They had a UK home available for at least 91 days, and they stayed there for at least 30 separate days in the tax year.
- They worked full-time in the UK for 365 days or more without significant breaks.
If any of these apply, the seafarer is considered a UK resident and can claim SED if they meet the conditions.
3. The Sufficient Ties Test
If seafarers do not meet the automatic overseas or UK residence tests, their residency status depends on how many ties they have to the UK.
This test looks at how connected the seafarer is to the UK.
These ties include:
- Family tie – If their spouse, civil partner, or minor children live in the UK.
- Accommodation tie – If they have a house, flat, or other accommodation in the UK that is available for at least 91 days, and they stay there for at least one night in the tax year.
- Work tie – If they work at least 40 days in the UK during the tax year.
- 90-day tie – If they have spent 90 days or more in the UK in either of the previous two tax years.
The more ties a seafarer has, the fewer days they can spend in the UK before being considered a UK resident.
If you are unsure about your status, then use the HMRC residency test >
Example 1: Someone who does not qualify
Emma is a seafarer but has spent very little time in the UK recently. In this tax year:
- She was not a UK resident in the past 3 tax years.
- She only spent 40 days in the UK this tax year.
- She does not have a home, family, or any other strong ties to the UK.
Because she meets the Automatic Overseas Test (fewer than 46 days in the UK and no recent UK residency), Emma is not classed as a UK resident.
Since only UK residents can claim the Seafarers’ Earnings Deduction (SED), Emma cannot claim SED this year.
Example 2: Someone who qualifies
James is a UK seafarer who works on ships worldwide. His situation is a little complicated:
- He spent 90 days in the UK during the current tax year.
- He has a home in the UK and spent 25 days there.
- His spouse lives in the UK full-time.
- He worked 15 days in the UK while waiting for his next sea assignment.
James does not meet the Automatic Overseas Test because he spent too many days in the UK and has strong ties. He also does not meet the Automatic UK Residence Test because he spent fewer than 183 days in the UK and didn’t work full-time here. He also spent less than 30 days in his home over the course of the year, so James does not meet any of the Automatic UK Residence criteria.
So, James must use the Sufficient Ties Test, as he has a family tie (spouse), an accommodation tie (UK home) and a work tie (15 UK workdays).
Since he spent exactly 90 days in the UK, James is right on the edge but he is still considered a UK resident.
Need further advice about how to claim Seafarers’ Earnings Deduction?
Here at Flying Fish, we run a specialist seafarers’ tax service to help. For just £210 a year, we will complete your tax return for you and make sure everything is correct so that your SED claim is approved.
If you’d like to find out more about how we can help, contact our team today or alternatively check out our ultimate guide to all things SED here.
