The Chancellor announced the 2026 Budget on 28 October, setting out changes to tax and savings that will affect people across the UK.
Most won’t make much difference to your life at sea, but a few are worth knowing about, particularly if you’re saving for a home, paying off a student loan or earning money from freelance work or a rental property.
The good news is that there are no changes to the Seafarers’ Earnings Deduction (SED).
Here’s a straightforward guide to the changes that matter to seafarers, when they take effect and what you might need to do.
Note: This is a guide, not a complete list of all the budget changes and it’s not personal financial advice. If you’re not sure how something affects you, get in touch.
1. Tax on savings is going up
Hopefully you’re saving some money while working at sea. If that money is sitting in a bank account earning interest, you might have to pay tax on that interest.
You can earn some interest tax-free first: £1,000 a year if you’re a basic rate taxpayer, or £500 if you’re a higher rate taxpayer. Anything over that gets taxed.
From April 2027, the tax on that interest goes up:
- Basic rate taxpayers: 20% → 24%
- Higher rate taxpayers: 40% → 44%
- Top rate taxpayers: 45% → 49%
Worth looking into: An ISA (Individual Savings Account) is a savings or investment account where you don’t pay any tax on the interest or growth. You can put up to £20,000 a year into ISAs, as long as you’re a UK tax resident. Read more about ISAs here
2. Landlords will pay more tax on rent
If you own a rental property in your own name, the tax rates on your rental income will increase from April 2027.
The rates will increase from 20% to 24% for basic-rate taxpayers, 40% to 44% for higher-rate taxpayers, and 45% to 49% for additional-rate taxpayers.
What it means for you: if you’ve bought a flat or house to rent out with your earnings, you’ll pay more tax on the rent. If the property is owned through a limited company, this change doesn’t affect you. If your rental property is in Scotland, different rules apply.
3. Student loan repayments: Threshold frozen and that’s not good news
If you went to university in England between 2012 and 2022, or in Wales from 2012, you’re probably on a Plan 2 student loan. You pay back 9% of anything you earn over £29,385 a year.
That £29,385 would normally go up each year, but it’s frozen until 2029.
What it means for you: as your pay rises, more of it goes on loan repayments.
A major trap to watch out for: claiming SED does not exempt you from student loan repayments. Your repayments are worked out on your earnings before SED is taken off. Even if your UK income tax bill is £0, you still have to pay 9% on everything you earn above £29,385. Learn more here.
Remember you still have to keep the Student Loans Company updated if you work overseas.
4. Earn more on the side before it’s taxed
The first £1,000 you earn each year from work you do for yourself, like day work or freelance jobs, is tax-free. From April 2027, that goes up to £3,000.
What it means for you: you can earn up to £3,000 a year from side work completely tax-free, without needing to report it to HMRC. If you earn over £3,000, you’ll report it on your tax return, which you’re probably doing anyway for SED.
5. Help buying your first home
There are three changes:
- Lifetime ISA: if you use a Lifetime ISA to buy a home costing over £450,000, the penalty for taking the money out is smaller.
- “Your First Home” scheme: the government will lend first-time buyers up to 20% of a new-build home’s price. You’ll need at least a 2.5% deposit. Applications open in February 2027.
- First-Time Buyer ISA: this replaces the Lifetime ISA from April 2029. You’ll be able to save up to £4,000 a year, and the government adds 25% on top when you use it to buy your first home.
What it means for you: if you’re saving for your first home with your earnings, there’s a bit more help coming.
6. Paying tax through a tax return? It’s going to change
If you fill in a tax return and owe more than £1,000, HMRC asks you to pay some of next year’s tax in advance. These are called “payments on account”. At the moment, you make two of these a year, in January and July.
What’s changing: from April 2029, people who make payments on account will have to pay more often during the year, rather than in two big lumps. Some people will be able to choose to have it taken through their wages (PAYE) instead. The government hasn’t said exactly how often yet.
What it means for you: if you claim SED, you probably owe little or no tax, so this won’t affect you.
But if you don’t meet the SED rules one year, for example by spending too long in the UK, you could end up with a big tax bill. Payments on account would then kick in for the following year.
If you expect to qualify for SED again, we can ask HMRC to lower your payments on account.
7. Making Tax Digital: more people will need to send updates to HMRC
Making Tax Digital (“MTD”) is HMRC’s new system for doing your taxes. Instead of one tax return a year, you keep your records on approved software or an app and send HMRC a quick update every three months.
Who it affects: people who earn money from self-employed work and/or rent out property, if the total they earn from those (before taking off any costs) is over a certain amount. From April 2027, that amount drops to £30,000.
It’s based on your self-employed and rental income only. Wages from an employer, like most crew contracts, don’t count.
What’s new in the Budget: if you have to join MTD in April 2027, you won’t get late penalty points for your three-monthly updates in your first year (2027–28). That gives you time to get used to it.
What it means for you: if you work at sea as self-employed or freelance, or you rent out a property, and your combined income from those is over £30,000, you’ll probably need to use MTD from April 2027. It’s worth getting set up early.
Learn more about Making Tax Digital here
What should seafarers do now?
Most of the Budget changes won’t affect you straight away, and there are no changes to the Seafarers’ Earnings Deduction.
But it’s worth understanding how the changes could affect your finances, particularly if you have a student loan, earn money from freelance work or rent out a property.
If you’re planning to buy your first home, the new schemes may also be worth looking into.
For now, the main thing is to stay on top of your tax affairs.
