Income Tax (Earnings and Pensions) Act 2003 section 391

Exception: seafarers with overseas earnings

Section 391 provides an exemption from the tax charge on certain payments made to seafarers whose earnings are already fully relieved by the foreign earnings deduction.

• Seafarers who qualify for the foreign earnings deduction may be exempt from tax on certain payments related to their employment.
• The exemption applies where, after the foreign earnings deduction is taken into account, the seafarer has no net chargeable earnings from the relevant employment for the tax year.
• The foreign earnings deduction for seafarers is set out in the rules governing deductions from seafarers' earnings in the wider employment income legislation.
• This provision formalises what was previously an accepted practice by HMRC, representing a minor change to the law to give statutory effect to that practice.