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HMRC’s Seafarers Earnings Deduction: Tax Exemption Yacht Crew Should Always Use

How British Can Stop Paying Income Tax If They Work Offshore

To begin with, there are certain rules and regulations that must be met in order to take advantage of this tax exemption.

Not all UK citizens employed in the seafaring industry will be able to use this tax break. It came into its current incarnation as of the Finance Act of 2012 due largely in part to a battle fought between the HMRC and seafaring unions. What it is today is a great way to help UK citizens earn more money and have an easier time at competing in the rather competitive global job market.

This law was originally introduced to alleviate the competitive nature of the industry as well as for national defence needs through having United Kingdom citizens in foreign ports and waters.

Although this piece of tax legislation was created in part for defending the country, unfortunately, it cannot be utilised by those employed in the military who may spend time in foreign waters. The seafaring unions are still in battle over this and hopefully one day those employed the military who spend time at sea will be able to qualify.

When looking at the HMRC 205 Helpsheet it looks like it is written in an unintelligible language and understanding it can be difficult.

To outline the rules and regulations the HMRC does not actually explain what constitutes a ship. In order to take advantage of this tax exemption, you must work on a ship. What is not considered a ship is noted as the following, floating and fixed production platforms, flotels, and mobile drilling platforms.

Working on a yacht offers a great lifestyle as well as tax free earnings. Image credit: Charter World

If you work on one of these types of units then you will not be eligible to receive the Seafarers Earnings Deduction. Some people will not take advantage of this tax break and will choose to not file their annual tax return and may face severe penalties and investigation. Other people may choose to start limited companies ashore or companies in foreign countries to try and pay fewer taxes.

If you are eligible for the Seafarers Earnings Deduction you truthfully cannot lose by harnessing this tax exemption. If you were to pay taxes through a limited company or fail to file your annual tax return would be a mistake.

Another reason why people don’t access this tax exemption is that of how many days they spend ashore in the United Kingdom. With the Seafarers Earnings Deduction you are allowed to spend a maximum of 183 days within the United Kingdom.

A day is considered if you are in the country from the beginning of the day until midnight that day. You will have to keep a hold of all paperwork and stubs that prove your time spent in the United Kingdom. If you were to choose to stay longer then 183 days within a taxable year then you would not qualify for the tax exemption.

Another rule that must be met is that you must embark or disembark from a foreign port to qualify for this exemption. This means you cannot leave port or return to port within the United Kingdom if you want to be able to access the tax break.

So if for whatever reason you may have left the country to move to Canada or any other foreign soil, this does not qualify you.

The rules of the HMRC are complex which puts most people off from accessing the SED. It is a great law that allows you to keep all money earned in foreign waters. If you were to not file your earnings would be a huge mistake and not worth the investigation or penalties that are sure to follow. Ultimately you will need to file your taxes if you ever want to borrow from a lender or get a mortgage. They will ask you to fill out a SA302 letter which can only be done by filing your taxes.

The Seafarers Earnings Deduction is a great tax law and should be utilised if you meet the criteria above.


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The Legal Process of Family Law Explained

Dealing with legal separation & severance

It is rare to find a couple who are comfortable with negotiating a process of separation themselves as it is often common that one or both parties will not wish to disclose sensitive or required information to enable positive discussions to reach an agreeable conclusion.

In these circumstances, the matter inevitably ends up going to Court proceedings and an application for financial remedy will enlist the assistance of the courts to resolve the dispute.

Marriage Certificate. Image credit: Pixabay
Marriage Certificate. Image credit: Pixabay

Stage 1 – Mediation

Before an application to the Court is granted, both parties must attend a family mediation information and assessment meeting, together or separately, to effectively learn more about the disputes they have with each other.

If at this vital stage no financial agreement can be made, then the Court will proceed to get involved and seek an application.

At this point, the process involves an application for the orders sought. Upon receiving the application, the Court will issue an automatic directive, required by both parties to file with the Court and serve on the other party full financial disclosure by completing Form E, along with documentary evidence to support and verify the statements given.

The Court will then set an initial date known as the First Appointment, which is a directions hearing allowing both parties to seek rulings from the opposing party to supply all outstanding information associated with the dispute, and secure all valuations and data that will assist the court and disputing parties to reach a resolution.

Stage 2 – Financial Dispute Resolution

Once full financial disclosure has been set forth, the Court will set out a further Financial Dispute Resolution appointment, also known as an FDR, which is designed to help the judge in place during the hearing to assist the disputing parties as to what the Court would order base don the evidence in front of them. This usually helps to break the deadlock and get both parties talking more rationally towards a settlement.

If however the FDR talks fail, the Court is left with no alternative but to set a future trial date and go to court.

Stage 3 – Trial

During the trial, both parties will present their evidence on matters under dispute, and ultimately it is down to the Judge to make a ruling based on the full findings of the case and set forth his or her views of a fair division of assets and any maintenance required to be paid, one way or the other.

Throughout these types of processes, it is normal to have a Family Law solicitor by each party’s side to assist with the legal framework and offer guidance, input and compassion. but most importantly, to present their client’s case to the Court in an expert and pragmatic fashion, by using their experience and deeply held knowledge of the legal system and similar cases. A fine example of experienced Family law barristers would be Worthingtons Solicitors in Kent.

A firm such as this, would usually have regular exchanges with the judge to gauge how the matter is being considered and to get a clearer indication of how the process may or may not be influencing their final decision in the future.

As you can imagine, a good amicable relationship with the judge in these instances is vital to ensure their clients concerns, arguments and evidence is heard as fully and and fairly as possible, to enable the judge to make a fair and balanced decision on the severance.

This is sometimes a great deal easier said than done, especially in cases where the solicitors is working in parts of the country outside of their usual remit. In these circumstances, experience and rock solid legal knowledge is critical