Income Tax (Earnings and Pensions) Act 2003 section 414B

Exception in certain cases of foreign service as seafarer

Section 414B provides an exemption from the termination payments tax charge for UK-resident employees or former employees whose employment involved significant periods of foreign seafaring service.

• The section applies to termination payments or benefits received by employees who are UK resident in the tax year their employment ends
• The termination payments tax charge does not apply where the employee's service included qualifying foreign seafaring service meeting specified minimum duration thresholds
• Foreign seafaring service is defined by reference to periods where the seafarers' earnings deduction applied (or would have applied), covering different legislative provisions depending on the era of service
• The qualifying thresholds are: at least three-quarters of total service, or the whole of the last 10 years if service exceeded 10 years, or at least half of total service including any 10 of the last 20 years if service exceeded 20 years