Finance Act 1998

Foreign earnings deductionU.K.

63 Withdrawal except in relation to seafarers.U.K.

(1)Section 193(1) of the Taxes Act 1988 (Schedule E foreign earnings deduction) shall cease to have effect.

(2)Before that section insert—

“192A Foreign earnings deduction for seafarers.

(1)Where in any year of assessment—

(a)the duties of an employment as a seafarer are performed wholly or partly outside the United Kingdom, and

(b)any of those duties are performed in the course of a qualifying period (within the meaning of Schedule 12) which falls wholly or partly in that year and consists of at least 365 days,

then, in charging tax under Case I of Schedule E on the amount of the emoluments from that employment attributable to that period, or to so much of it as falls in that year of assessment, there shall be allowed a deduction equal to the whole of that amount.

(2)In subsection (1) employment “as a seafarer” means an employment consisting of the performance of duties on a ship (or of such duties and others incidental to them).

(3)For the purposes of this section a “ship” does not include—

(a)any offshore installation within the meaning of the M1Mineral Workings (Offshore Installations) Act 1971, or

(b)what would be such an installation if the references in that Act to controlled waters were to any waters.

(4)Schedule 12 has effect for the purpose of supplementing this section.”.

(3)The references in the Taxes Act 1988 to section 193(1) are amended as follows—

(a)in section 19(1), in Case I of Schedule E, omit the words from “and to section 193(1)" to the end;

(b)in paragraph 10 of Schedule 11, after “193(1)" insert “ or 192A ”;

(c)in section 132(3) and paragraphs 1, 1A, 2(1), 3(1) and (3), 5 and 6 of Schedule 12, for “193(1)" substitute “ 192A ”.

(4)In Schedule 12 to that Act—

(a)in paragraph 3(2) (qualifying periods)—

(i)in paragraph (a) for “62" substitute “ 183 ”, and

(ii)in paragraph (b) for “one-sixth" substitute “ one-half ”;

(b)in paragraph 5 (duties treated as performed outside the United Kingdom)—

(i)for “vessel or aircraft" substitute “ ship (within the meaning of section 192A) ”, and

(ii)in paragraphs (a) and (b) for “voyage or journey" substitute “ voyage ”.

(5)Subsections (1) to (4) above have effect in relation to—

(a)emoluments attributable to qualifying periods beginning on or after 17th March 1998, and

(b)emoluments attributable to qualifying periods beginning before 17th March 1998 which are received on or after that date.

(6)Nothing in those subsections affects the question what deduction (if any) falls to be made under section 193(1) of the Taxes Act 1988 in the case of emoluments attributable to a qualifying period beginning before 17th March 1998 and received before that date.

(7)For the purposes of subsections (5) and (6) above the question whether emoluments are attributable to a qualifying period beginning before 17th March 1998 shall be determined without reference to any arrangements entered into on or after that date.