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British Seafarers ? Managing your finances effectively

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  • British Seafarers ? Managing your finances effectively

    I've just uploaded a new post to my blog which is about finances. It's not comprehensive by any stretch of the imagination, but discusses the 100% tax relief for seafarers and the Self Assessment. It also looks at ways to invest as a seafarer which are beneficial, for instance if you invest in stocks and shares within the wrapper of an ISA then you don't need to declare this on your Self Assessment which simplifies the process. It also explains that you can benefit from a buy to let property without having any tax liabilities, and finally it looks at how you get a 20% tax relief contibution to your pension from the government, even though you don't pay tax.

    I?m not a financial advisor, and would recommend that anyone reading the below information researches it fully or consults a registered financial advisor or tax advisor to ensure that they are getting accurate information.

    It?s very easy to lose sight of your finances as a seafarer, but if you?re employed and paid from an offshore company you need to be aware of the requirement to submit a ?Self-Assessment? on an annual basis, and failure to do this can cause you a great deal of trouble. It could be embarrassing to explain to your employer that you can?t embark on your next voyage because you are in court for tax evasion.

    * Seafarer Earnings Deduction - 100% Tax Relief
    * Seafarer National Insurance
    * Stocks, Shares and Trust Funds ? Invest using an ISA
    * Rental Property
    * Pension

    To read the post in full, please visit:

    http://www.zenithocean.com/merchant/...s-effectively/

  • #2
    That was very interesting, thanks. Not qualified yet but not far away and will be looking to start a pension etc at that point. Already have a stocks and shares ISA and will probably start investing a lot more when I start earning decent money provided I am on a vessel with access to the internet so I can buy and sell at sea. Like the idea of buy to let as well although imagine this might be difficult being out of the country for a while (what happens if the roof falls in and you are uncontactable for example?) Although I suppose if you do it through a management company they may be able to deal with these sort of things...

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    • #3
      A lot of colleagues have buy to let, and they use management companies who vet the tenant, handle the deposit, provide the contracts and resolve issues when they arise. They do take a significant cut from the income for this service though.

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      • #4
        I would say this is a fantastic post YoungMariner , I've always been a bit patchy with my finances so I'll give it a good look through.

        Thanks a lot!

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        • #5
          This might be handy too especially for the single seafarer whos away a lot.

          https://www.gov.uk/rent-room-in-your...-a-room-scheme

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          • #6
            The Hargeaves Lansdowne website and Trustnet are both good for comparing the performance of managed share ISAs, though I personally prefer a self select ISA where you choose you own shares.

            http://www.hl.co.uk/funds

            and

            http://www.trustnet.com/
            Former TH cadet with experience of cruise ships, buoy tenders, research ships and oil tankers

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            • #7
              Agree with you on HL. I have a Hargreaves Lansdown Stocks and Shares ISA and find its quite competitive for investing in funds and long term investments. The transaction costs for shares are pretty high though. The SIPP is also fairly good, but has a few hidden charges.

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              • #8
                Originally posted by YoungMariner View Post
                A lot of colleagues have buy to let, and they use management companies who vet the tenant, handle the deposit, provide the contracts and resolve issues when they arise. They do take a significant cut from the income for this service though.
                You should expect a letting agent's cut of the monthly rent to be in the region of 12-18% (i.e. 10-15%+VAT).

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                • #9
                  remember past performance isn't an indicator of future performance.
                  Your home is at risk if you leave all the doors and windows open.

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                  • #10
                    Nice thread. There is a real lack of clear information about finance to officers. It's good to have some kind of source.

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                    • #11
                      Do I qualify for Seafarer's Earnings Deduction?

                      You may qualify for Seafarer's Earnings Deduction (SED) if you meet certain criteria. There are three steps to deciding if you have a claim, and these are explained below. Any claims must be made in a Self-Assessment Tax Return. The Self-Assessment help sheet HS205- Seafarer's earnings deduction contains the conditions and a grid to calculate the days in and out of the UK in the claim period.

                      1. A valid claim period

                      This will be a period of at least 365 days beginning and ending with a period outside the UK. A period outside the UK can be a period of employment, a period of unemployment or a holiday abroad. Once a 365-day period has been attained it is carried on until there is a failure. A failure occurs if at any time during the claim period you:

                      a) Spend 183 or more continuous days in the UK or

                      b) Break the half-day rule.

                      The half-day rule is applied at each return to the UK. All days since the start of the claim are added and divided by 2 (A). Then all days spent in the UK since the start of the claim are added (B). The two figures are compared and where B exceeds A there will be a failure in the claim period. The claim period ends on the previous return date. A new claim period must then commence from the earliest possible date of leaving the UK.

                      2. A valid foreign port for each employment in each tax year

                      Each employment in each tax year must include at least one voyage or part voyage that begins or ends at a foreign port. A voyage or part voyage that begins or ends at an oil or gas installation (including a rig in drilling mode) located outside the UK and outside the designated areas of the UK continental shelf can be regarded as beginning or ending at a foreign port for this purpose.

                      3. The employment must be on board ships

                      A seafarer is someone that works on a ship. There is no definition of a ship in tax law but 'offshore installations' are specifically not regarded as ships. The Self-Assessment help sheet HS205- Seafarer's earnings deduction gives examples of 'offshore installations'. Grey areas may need to be considered by The Marine Section, South Wales Area, Ty Glas Road, Llanishen, Cardiff, CF14 5FP
                      Once you have decided that you have a valid claim it will be necessary to submit the Self-Assessment Tax Return. The claim to SED is made at box 1.37 on the employment page that is part of the Self-Assessment Tax Return. You need to ensure that:
                      • a separate employment page will need to be completed for each employment. If you have no foreign port then SED should not be claimed.
                      • the amount to be claimed as SED is the salary not the tax
                      • the amount to be claimed should be apportioned (on a time basis) to exclude periods prior to the start of the claim or after the failure of the claim and for periods of employment on 'offshore installations'.

                      Comment


                      • #12
                        Breaking "the half-day rule" is a common way to mess up a claim. Need to be careful with that.

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                        • #13
                          Any chance you could give an example of an easy mistake made with the half day rule?

                          For instance, I spend 30 days outside the UK, then stay in the UK for 70 days, then spend 265 days at sea (god help me).

                          A = 365/2 = 187.5
                          B = 70
                          A > B no problems.

                          However after 100 days:
                          A = 50
                          B = 70
                          B > A claim period failure.

                          Does it matter that by the end of the claim period A > B, or does the fact that by 61 days into the claim period B > A immediately end the claim period?

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                          • #14
                            Originally posted by pignutpilot View Post
                            The half-day rule is applied at each return to the UK. All days since the start of the claim are added and divided by 2 (A). Then all days spent in the UK since the start of the claim are added (B). The two figures are compared and where B exceeds A there will be a failure in the claim period. The claim period ends on the previous return date. A new claim period must then commence from the earliest possible date of leaving the UK.
                            So no, because the half day rule is applied when you return to the UK. At thirty days into your claim period, A = 15 and B = 0. Don't go spending it all on sweets.

                            Comment


                            • #15
                              Originally posted by geordie dancer View Post
                              So no, because the half day rule is applied when you return to the UK. At thirty days into your claim period, A = 15 and B = 0. Don't go spending it all on sweets.
                              Thanks. I think I'll spend it all on curries instead then

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