Self-employed seafarers

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Tags: self-employed seafarers, seafarers tax, seafarers taxation, seafarers tax return,

If you are a self-employed seafarer then normally you will not be able to claim the Seafarers Earnings Deduction.

However, we now have a solution for you that will enable you to fulfil the HMRC requirements and make a claim for a tax rebate.

There are various methods that can be adopted depending on individual circumstances. Below are a table of examples that show the methods that can be used and examples of returns that can be achieved. Of course, each person’s circumstances can be slightly different so the examples are guides. If you would like an example specific to you then please get in touch.

Even if you find that you are not eligible for SED in one year it may be that one of these methods is still be more beneficial than the normal self-employment route. Ask us and we will try to find the right solution for you.

Our umbrella company, will employ you and deal with your payroll, invoicing, payments and tax returns/SED claims. For a simple fixed monthly (tax-deductible) fee of only £75.00 per month everything is taken care of for you.

It works like this:

  1. Our umbrella company invoices your agency or client.
  2. We collect the payment and then pay you after making the deductions for PAYE/NIC’s and our fees.
  3. You submit monthly expenses (with receipts) and we reimburse these to you along with your salary.
  4. Each month we will provide you with a payslip and a P60 at the end of the tax year.

What our fee includes:

  1. The invoicing, payroll and payment process as detailed above.
  2. End of year self-assessment tax return and/or SED claim.
  3. Fee Insurance Protection. This covers our fees should HMRC make an enquiry into your SED claims or self-assessment tax returns.

What it does not cover:

Professional Indemnity Insurance. You will need to provide us with a copy of your insurances. We can arrange a quotation and cover for you should you need it

If you prefer owning your own Limited company then we can help you set it up and administer it for you. There are advantages and disadvantages of a Limited over the Umbrella Company solution.

Advantages

  1. A Limited company can be effective and provide flexibility if you cannot be certain of eligibility for SED on an ongoing basis.
  2. Complete ownership and control.

Disadvantages

  1. Generally less tax-efficient than the Umbrella Company solution.
  2. Risk of IR35 legislation and related HMRC costs.
  3. More expensive fees for accounting and tax reporting.
  4. Complete personal responsibility for company legal and statutory requirements.
  5. Higher administrative burden.
  6. A business bank account is required and for you to manage payments.

If this option is still attractive to you then we can provide a full service package to take away the administrative burden for a fixed (tax-deductible) fee of £150.00 per month.

Our monthly service package includes:

Bookkeeping of up to 2 hours per month to include:

  1. Issuing and processing sales invoices
  2. Processing purchase invoices and expenses
  3. Bank reconciliations
  4. Monthly payroll production – payslip and advice of PAYE/NIC’s payments required
  5. Production and filing of company Annual Accounts
  6. Preparation and filing of Corporation Tax
  7. Preparation & filing of year end payroll returns
  8. Tax and accounting advice for the UK company and UK-resident directors to minimise liabilities.
  9. Preparation and filing of one Director’s personal tax return/SED claim
  10. Preparation and filing of company Annual Return

If you would like us to set up your Limited company then there is a one-off cost of £300.00. For this we will incorporate your company within 24-48 hours and provide you with the documents to enable you to open a business banks account.

If you have any further question then please call us or send an email.

Examples and comparison of pay methods available (annualised examples) Umbrella Company Pay Calculation Standard Limited Company Standard Limited Company Inside
Fees
Invoiced to agency/client 51,750 51,750 51,750
Other income – Flat Rate VAT Savings 1,759 1,759
51,750 53,509 53,509
Deductions
Deemed salary 43,260 11,310 41,636
Employers NI 4,890 801 4,682
Reimbursed Expenses 3,000 3,000 3,000
Accounting/Umbrella Fee 600 1,200 1,200
Total deductions 51,750 16,311 50,518
Company Profits
Limited company profit 35,439 1,232
Corporation tax
Funds available for dividends 27,997 973
Personal Income
Salary 43,260 11,310 41,636
PAYE Tax -8,529 -967 -7,879
National Insurance -3,617 -688 -3,600
Salary after Tax & NI 31,114 9,655 30,156
Reimbursed Expenses 3,000 3,000 3,000
Net income after tax 34,114 12,655 33,156
Dividend paid 27,997 973
Claim for SED 8,529 967 7,879
Net annual take home pay 42,643 41,619 42,009
82% 80% 81%
Note:
Actual costs 9,107 10,131 9,741
18% 20% 19%