Making Tax Digital (MTD): What Seafarers Need to Know

HMRC's Making Tax Digital initiative is one of the biggest changes to the UK tax system in decades — and you may have already heard about it. Here's what it means for seafarers, and whether it's likely to affect your tax affairs.

What is Making Tax Digital?

Making Tax Digital is HMRC's long-term programme to move the UK tax system away from annual paper-based returns and towards ongoing digital record-keeping. The most significant change under MTD for Income Tax Self Assessment (MTD ITSA) is that the traditional single annual tax return is being replaced with a system of quarterly updates submitted, followed by a final year-end declaration.

What does this mean for most seafarers?

The majority of our clients are employed seafarers — meaning your income is employment income, received via PAYE from your employer. MTD will only affect you if you have income from self-employment or property which is above the MTD threshold. Taxpayers without these types of income will continue to manage their tax affairs as they currently do.

This means that if your only income is from seafaring employment, and you claim the Seafarers' Earnings Deduction (SED) through your Self Assessment return, MTD is unlikely to apply to you at this stage.

However, if you are a self-employed seafarer, or if you have rental property or other self-employment income on top of your seafaring wages, you may fall within scope — particularly if that income exceeds the thresholds above.

What changes for those who are affected?

For anyone in scope, the new rules require taxpayers to keep electronic records, submit quarterly reporting of receipts and expenses, and complete the usual end-of-year tax return.

There will be no penalties for missing quarterly update deadlines during the first year (2026–27), although penalties will still apply for late submission of the final declaration or late payment of tax.

You don't need to navigate this alone

As always, SK Tax Service will be monitoring how MTD develops and how it applies to our seafaring clients. If we believe the changes affect your situation, we will reach out to you directly and walk you through exactly what needs to happen — and when. Our job is to make sure you remain fully compliant while continuing to claim every penny of tax relief you are entitled to under the Seafarers' Earnings Deduction.

If you are looking for Seafarers Tax Advice, or looking for help with how MTD affects you please don't hesitate to call us on 01427 753 400 or use the contact form on our website. We're here to help.