Living on a Cruise Ship: Do You Still Pay UK Income Tax?

More people are choosing an unconventional lifestyle by living full-time on cruise ships. Some sell or rent out their homes and spend the year travelling across oceans, enjoying prepared meals, onboard entertainment, housekeeping services, and the opportunity to explore new destinations regularly. Others even invest in long-term accommodation, often described as a “villa at sea,” which allows them to live onboard for many years.

While the lifestyle may feel detached from everyday life on land, the UK tax system does not assess tax based on lifestyle choices. Instead, income tax liability depends largely on tax residence. This means that even if someone lives on a cruise ship, they may still be considered a UK tax resident and taxed accordingly.

How UK Tax Residence Works

Once an individual’s tax residence status is established, the UK tax treatment is clear:

• UK tax residents are taxed on their worldwide income and capital gains.

• Non-UK residents are taxed only on UK-sourced income, such as:

  • Rental income from UK property

  • UK dividends and bank interest

  • Gains from UK property disposals

Foreign income and gains are generally not taxable in the UK for non-residents.

The Statutory Residence Test (SRT)

Whether someone lives in a house, a hotel, or on a cruise ship, UK tax residence is determined using the Statutory Residence Test (SRT). Living at sea may support a non-UK resident position, but only if the conditions of the SRT are met.

The test is applied in a series of steps.

Step 1: Automatic UK Residence

An individual will automatically be treated as UK tax resident if either of the following applies:

• They spend 183 days or more in the UK during the tax year; or

• They have a period of 91 consecutive days where their only home is in the UK, with at least 30 days falling in the tax year, and they spend sufficient time there.

If either condition is met, the individual is UK tax resident regardless of where they live for the rest of the year.

Steps 2 and 3: Automatic Non-UK Residence

If automatic UK residence does not apply, the next stage considers whether the individual qualifies as automatically non-UK resident.

An individual may be treated as non-UK resident if they meet one of the automatic overseas tests, such as:

• Spending fewer than 16 days in the UK during the tax year; or

• Spending fewer than 46 days in the UK if they were non-resident in all of the previous three tax years.

Meeting any one of these tests results in non-UK resident status for that year.

Step 4: The Sufficient Ties Test

If none of the automatic tests provide a clear outcome, the sufficient ties test is used. This test looks at a combination of UK ties and the number of days spent in the UK.

The main UK ties include:

• Family tie
  A spouse, civil partner, cohabiting partner, or minor child who is UK tax resident.

• Accommodation tie
  UK accommodation available for more than 91 consecutive days, where at least one night is spent there. This can include owned property, rented property, or even a close relative’s home if used frequently. Long-term hotels or Airbnb stays may also qualify.

• Work tie
  Working in the UK for more than 40 days in the tax year, with each day involving more than three hours of work.

• 90-day tie
  Spending more than 90 midnights in the UK in either of the previous two tax years.

• Country tie
  The UK is the country where the individual spends the greatest number of days during the tax year.

The more ties an individual has, the fewer days they can spend in the UK before becoming tax resident.

What Cruise Ship Residents Must Do to Be Non-UK Resident

To successfully maintain non-UK tax residence while living on a cruise ship, an individual must:

• Carefully limit the number of days spent in the UK in line with the SRT rules; and

• Reduce UK ties, such as:

  • Owning or regularly using a UK home

  • Having close family members resident in the UK

  • Carrying out substantial work in the UK

  • Having a strong UK presence in previous tax years

Simply selling a property and living on a ship is not enough if other UK connections remain.

Practical Consideration: UK Waters Still Count

An important practical point is that time spent on a cruise ship does not count as time outside the UK if the ship is in UK territorial waters at midnight. Any such day may count as a UK day for tax purposes.

As a result, cruises that begin and end outside the UK—such as itineraries in the Southern Hemisphere or cruises starting and finishing in the USA—are often more effective for those seeking to avoid UK residence complications.

Final Thought

Living on a cruise ship may feel like a clean break from life on land, but from a tax perspective, UK residence rules still apply. Anyone considering this lifestyle should seek professional advice and carefully monitor their days and ties to the UK to avoid unexpected tax liabilities.

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