Self-Assessed Tax Return – Completing Your Return
Once you have successfully registered as a self assessed tax payer the next step is to complete your tax return. Follow this 6 Step guide to understand how to submit your assessment to HMRC online. Remember once you register as a self-assessed tax payer you must submit a self-assessment every year regardless of whether you have achieved a ‘Tax Qualifying Year’. A UK tax year runs from 6th April to 5th April the following year and if you complete your return online then you must submit your return by the 31st January the next year or you will face an automatic penalty.
Step 1 – Log into your HMRC account and select ‘Self Assessment’ under the income section.
Step 2 – Select ‘Complete Return’
Step 3 – Read the welcome page and ensure your personal circumstances are suitable before clicking ‘Start’.
Step 4 – Fill out all of the required details and when you arrive at Section 3 ‘Tailor Your Return’ select all boxes that apply to you. Additionally ensure you select that you want to ‘claim other tax reliefs’, this is located on the final page of the Tailor Your Return section and is the section relevant to SED. Then click next and proceed to step 5.
Step 5 – The information you previously entered in the ‘tailor your return’ section will be used to generate an individualised tax return form. It will only contain the sections relevant to your personal tax circumstance although not all of the questions and boxes in the sections will be relevant to you. The language used here is largely simple and easy to understand. If you are unsure of the information required in a particular box click the small question mark beside it for further information. If the box is not relevant to you then leave it blank, do not enter a 0 as this will confuse the system. Work though your return until you arrive at the section entitled ‘other tax reliefs and deductions’. It is in this section that you will claim your Seafarers Earnings Deduction and there is only two boxes to fill with details required as explained below:
1. Seafarers Earnings Deduction total relief amount – This is the amount of taxable income you wish to claim relief against. If you have more than one employer remember the relief can only be applied to income obtained from duties as a seafarer. Calculations for the relief total should be based upon your annual taxable pay as shown on your P60 issued by your employer.
Your annual taxable pay is likely to be lower than your annual salary as tax relief may already have been applied automatically by your employer. This is especially likely if you make contributions towards a pension directly from your pay. For individuals who have have previously claimed their tax back and have ongoing claim the correct value to enter will be the figure as shown directly on your P60.
There is however two scenarios where you can’t claim 100% relief against your annual taxable seafarers income for the tax year.
1. Scenario one is where is when you submit your first claim with the first 365 day tax qualifying year being split across two tax years. As a consequence you can only claim part relief on the income earned from the first date out of the UK until the end of the first tax year.
2. The second scenario is where you have submitted successful claim(s) for previous tax qualifying year(s) but have broken the rules and wish to make a part claim.
In reality the calculation remains simple and both of these situations are explained simply in the case studies below. The case studies are based on an individual receiving the same taxable income for the whole tax year with no monthly variations. Finally an automatic calculator is included at the bottom of this page to easily calculate the value for your. The second scenario occurs where you have previously achieved an eligible 365 day tax qualifying year. Your claim continues to run until you ‘break’ the criteria and your eligible period comes to an end. This could occur for a number of reasons including for e.g. by spending too much time inside the UK and breaching the half day rule, changing employment to a non seafaring job or failing to visit a foreign port. When this occurs you achieve what is known as a part tax year. This means you can claim relief up until the point in which your eligible period failed.
Case Study 1 – First Tax Qualifying Year:
Dave works as a seafarer and his P60 shows an annual taxable income from his employment of £32,000. His eligible period began when he left the UK on the 01/07/16 to join his first ship . Having complied with all of the claim criteria 365 days later on the 01/07/17 he is able to submit a claim.
As the UK tax year runs from the 6th April to 5th of April on the following year we can see that Dave’s first ‘tax qualifying year’ is split across two separate UK tax years, 2016/17 and 2017/18. As a result for the 2016/17 tax return he can only claim £24,460 of relief against his £32,000 taxable income. This because there is 278 days from the 01/07/16 until the end of the tax year on 05/04/17. The relief value is therefore calculated by dividing the annual taxable income by 365 and multiplying it by the amount of days to the end of the tax year from the first date out of the UK (£32,000/365 x 279 = £24,460).
If you’re first tax qualifying year is split across two tax years you can use our simple and automatic calculator at the bottom of this page to automatically calculate your partial relief value. Firstly enter your annual taxable income; in the first date field enter your first date out of the UK and in the second date field enter the end of the tax year (always 5th of April on the following year). The adjusted value of your relief will then be automatically calculated and displayed.
Case Study 2 – A ‘partial’ tax year
Emma has a taxable income £35,000 and is employed as a seafarer working on foreign going vessels. She has been successfully claiming 100% relief on her earnings for the past 10 years. She paid of her last foreign going vessel and returned to the UK on 10/10/2017 and after this date her position changed within her company. She now works on a UK inland waters ferry and as a result will spend all of her time in the UK and she won’t be undertaking any foreign going voyages in the future. As a result Emma’s claim stopped on the 10/10/2017 as she broke the qualifying criteria.
As Emma had an ongoing claim she can claim a ‘part year’ of seafarers earnings deduction relief on all of her income earned for the 2017/2018 tax year from 6th April 2017 up until the 10/10/2017. Therefore she can claim £18,027 of relief against her £35,000 taxable income. This because there is 188 days from the 06/04/17 until the date when her claim broke 10/10/17. Her relief value was calculated by dividing the annual taxable income by 365 and multiplying it by the amount of days from the start of the tax year until the date her claim broke (£35,000/365 x 188 = £18,027).
If you have a partial tax year then calculate your relief due using the automatic calculator below. Firstly enter your annual taxable income; then in the first date field enter the start date of the tax year (6th April) and in the second date field enter your date of return to the UK from the last eligible period. The adjusted value of your relief will then be automatically calculated and displayed.
2. Names of your ships – having completed the above the next thing to do is to enter the names of the ships you served upon during the tax year. Then click next and continue the self assessment process.
Step 6 – This is the last step. In the very last section of your tax return there is an box to enter optional additional information. In this box enter all of the dates out of the UK during that tax year that you utilised in the process of calculating your entitlement to SED. This should include foreign holidays and the dates spend abroad whilst serving on a vessel including the name of the vessel. Utilise only numbers, letters and full stops in this section. Do not make new lines using the return key or use other special characters. Whilst the system will tell you that these other characters can be entered it notorious for returning errors. HMRC are well aware of this issue and as long as the information is entered here it doesn’t matter that it is not formatted in a particularly pretty fashion. View the image below for an example of what to enter.
Once you have entered these details click next and proceed to the review your return section. Double check all of the details entered and once you are happy click submit your return. It will instantly review your submission and indicate what refund you are due.
Finally if you have any doubts regarding anything tax related then phone HMRC directly. They are extremely helpful and most questions can be resolved immediately over the phone. In vast majority of circumstances if you phone with a question regarding claiming Seafarers Earnings Deduction the HMRC contact centre staff will transfer you immediately though to a ‘tax technician’. These individuals are experts and will normally give you an immediate detail response to your query.