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Sam
Sam, Accountant
Category: Tax
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, I am just about to go to work cruise company in

Resolved Question:

Hi,
I am just about to go to work for a cruise company in the US. I have been told by them, that as I am a seafearer and paid in US dollars, I will not have to pay tax on my earnings? Please can you confirm this?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Hi

Thanks for your question

I assume you are a UK citizen - if not then please advsie and I will arrange for a USA tax expert to deal with your question

Bu if you are a UK citizen then

Much is dependent on how long you are going to be working in this way - and whether you will come home for visits to the UK and how frequenbt these will be and how long you will stay.

So please advise

1) When this will start from

2) How long you initially will be contracted to work and whetehr this wille xtend past a full UK tax year (so if you left today would you remin doing this work beyond 05/04/2016)

3) Where the ship will cruise (America - Europe UK )

4) What visits you envisage making back to the UK (so for example will you have month on and amonth off - or some other arrangement

Thanks

Sam

Customer: replied 2 years ago.

Hi Sam,

I will start in April, for 16 weeks, then return to the UK for 8 weeks, then back out for 16 weeks then home for 8. I will be paid in US dollars and be cruising around the Caribbean. I am a UK citizen,

Steve

Customer: replied 2 years ago.

Hi Sam,

I start in April, and it will be a 16 weeks on 8 weeks off arrangement, cruising the Caribbean. I am a UK citizen, and plan to return here on my 8 weeks off.

Expert:  Sam replied 2 years ago.

Hi Steve

Thanks for your response

.

For you to be treated as tax free in the UK, you have to achieve the status of not resident in the UK if you do not qualify for the Seafarers Earnings deduction, and whilst I can see you will qualify for 2015/2016 tax year - you will not for 2016/2017 - due to the way the occasions are mesured each time you leave, and each time you arraive to/from the UK

So I first will advise how the normal non residency rules work -

To be non resident (In HMRCs eyes) you must leave the UK to work AND live for at least a full tax year - during which time your visits back to the UK must not exceed more than 91 days. You at present with this arrangement will always excced the 91 dyas permitted as a return to the UK, and this along with the fact you are not actually leaving the UK to work and luve abroad, but are merely working out of the UK - so although you may be able to minupulate your time in the UK (for the second and future tax years( so that you do qualify for Seafarers Earnings deduction I have added a link here for the criteria for your information

https://www.gov.uk/seafarers-earnings-deduction-tax-relief-if-you-work-on-a-ship

This way you can see for yourself.

But if you do not qualify for this relief then you must consider that you will not actually be moving away from the UK you are merely going to be working out of it, and will return home every 16 weeks and home for 8 -

So for the tax year 2015/2016 which starts on 6th April you will have 16 weeks out and 8 in, then another 16 weeks out and 8 in , then the final 4 out.

So will be in for 16 weeks x 7 = 112 days- thats 21 days in excess of the permitted 91 days

So you either need to make sure that some of the two 8 weeks leave period you stay OUT of the UK and also monitor this for the future tax years too or keep on top of the eligibility for the Seafarers deduction.

Either way however, you must alert HMRC of this work abroad - on form P85 - link below for this form, Fill it in, send it to HMRC with your P45 (if you have just ceased employment) and they will arrange to set you up within self assessment as you will need to declare this income, and also complete a residency page and or seafarers deduction claim - both of which will require details your days in and out of the UK.

So make sure you keep all receipts and flight tickets etc as evidence of your time out of the UK

Link here for form P85

https://www.gov.uk/government/publications/income-tax-leaving-the-uk-getting-your-tax-right-p85

Let me know if I can be of any further assistance.

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

so, in order to claw back the 21 days I am over the the permitted 91 days, can I go on holiday, straight after working on the ship, each period of time, to ensure I am within the law?

Expert:  Sam replied 2 years ago.

Hi

Thanks for your response and furtehr question

Yes you can - make sure though that you do not come back to the UK and then set off on holiday - that you go on holiday straight from departing from that 16 week rotation.

Let me know if you need any furtehr assistance, but it would be appreciated if you could rate the level of servive I have provided, as this ensures that I am credited for my time by Just Answer

Thanks

Sam

Sam, Accountant
Category: Tax
Satisfied Customers: 13775
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Sam and other Tax Specialists are ready to help you

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