EIM33053 - Seafarers’ Earnings Deduction: attribution of earnings: effect of other deductions
Section 381 ITEPA 2003
The deduction is available only against the net earnings
attributable to the eligible period.
The net earnings are amounts remaining after deductions
for:
- pension contributions
- allowable expenses and
- capital allowances.
The rule mainly affects cases where the eligible period covers only part of the tax year.
Example
A seafarer has an eligible period ending on 5 November 2003. For
2003/04 he has earnings of £24,000 and pays pension
contributions of £2,400. His net earnings are £21,600.
The earnings attributable to the eligible period from 6 April
2003 to 5 November 2003 are £12,600 (7\12ths of £21,600).
Liability for 2003/04 is calculated as follows:
| Earnings | £24,000 | |
| Pension | £2,400 | |
| Seafarers' deduction | £12,600 | |
| £15,000 | £15,000 | |
| Net taxable earnings | £9,000 |
Without this rule a person could effectively get relief for a full year's expenses, etc. against a part year's earnings. So in the example above there would have been a seafarers' deduction of £14,000 (7/12ths of £24,000) plus pension contributions of £2,400 leaving only £7,600 taxable.
