Most offshore oil and gas workers cannot claim Seafarers’ Earnings Deduction, because HMRC does not treat an offshore installation as a ship. But “offshore” covers a lot of different vessels, and some of the people working in the sector do qualify. It depends on what you are standing on.
What HMRC excludes
There is no statutory definition of a ship, but the legislation is explicit about what is not one. An offshore installation used in the oil and gas industry is excluded, and HMRC lists the following:
- fixed production platforms
- floating production platforms
- floating storage units
- floating production storage and offloading vessels (FPSOs)
- mobile offshore drilling units — drillships, semi-submersibles and jack-ups
- flotels
More broadly, any vessel engaged in the exploitation of mineral resources by means of a well is excluded. That is the test to apply to anything not on the list.
It floats, it moves, it has a master and a flag — and it still is not a ship. A drillship or an FPSO meets every everyday description of a ship. For SED it is an offshore installation, and time spent working on one does not qualify.
Vessels that usually do qualify
| Vessel | SED position |
|---|---|
| Platform supply vessels, anchor handlers | Generally ships |
| Emergency response and standby vessels | Generally ships |
| Seismic and survey vessels | Generally ships |
| Dive support and ROV support vessels | Generally ships — check what the vessel was doing |
| Cable and pipe-laying vessels | Generally ships |
| Shuttle tankers | Generally ships |
| Drillships, semi-subs, jack-ups, FPSOs, FSUs, flotels | Excluded |
The same vessel can fall on either side at different times. What matters is what it was engaged in during the period you are claiming for, which is why vessel names and dates matter on the return.
The North Sea problem
Even on a qualifying vessel, there is a second hurdle. To build an eligible period you need days outside the UK, and your duties only count as performed abroad if the vessel is on a voyage, or part of one, that begins or ends outside the UK.
HMRC treats the UK sector of the North Sea as part of the UK. A supply vessel running between Aberdeen and installations in the UK sector is working in the UK for this purpose. A vessel working the Norwegian or Dutch sector, or sailing to and from a foreign port, is a different matter.
If you have worked on both
Plenty of people move between installations and ships over a year. Earnings from qualifying ships can attract SED while earnings from installations do not, and the day-count still has to work across the whole period. This is where claims go wrong, and where careful records earn their keep.
Common questions
Do offshore workers pay tax in the UK?
UK-resident offshore workers are taxable on their earnings in the normal way. Working offshore does not in itself bring any relief. SED is available only where the work is on a ship, not an installation.
Does working in the North Sea qualify for SED?
Not in the UK sector, which is treated as part of the UK. Work in foreign sectors, or on voyages beginning or ending at a foreign port, can qualify if the vessel is a ship.
I work on an FPSO that is registered as a ship. Can I claim?
No. HMRC names floating production storage and offloading vessels specifically as offshore installations, regardless of registration or flag.
I was told years ago that I could not claim. Is it worth checking again?
If your work has moved onto different vessels, or into foreign sectors, possibly. The answer depends on the vessel and the voyage, not on the industry you work in.
Not sure where you stand?
Tell us your vessel, your dates and where you sailed. We will tell you plainly whether you have a claim.
Related: Do I qualify for SED? · How to claim · National Insurance for seafarers
Based on HMRC Helpsheet HS205, Seafarers’ Earnings Deduction. Tax rules change and individual circumstances differ — this page is general information, not advice on your own position.
