Are you planning to come from another country to work as an employee in the UK?
From 6th April 2025, an improved version of overseas workday relief (OWR) will be introduced.
This tax relief is currently available for UK resident non-UK domiciled employees – UK resident workers whose permanent residence is located outside of the UK for tax purposes – on offshore earnings, related to duties performed for their UK employer outside of the UK.
So, how is OWR changing, and what will this mean for non-UK domiciled employees and UK employers?
How is overseas workday relief changing?
Under the current OWR system, earnings for duties performed overseas as part of employment by a UK employer are exempt from tax in the UK if:
- The employee’s domicile is not in the UK
- They’re taxed on the remittance basis
- Their earnings aren’t remitted to the UK
This tax relief is currently available for up to 3 years.
From 6th April 2025, eligibility will be based on the employee’s residence instead of their domicile.
Qualifying new residents – people arriving in the UK to work as employees who haven’t been UK residents for 10 previous consecutive tax years – can claim OWR with the following conditions:
- Available for up to 4 tax years (with separate annual claims via self-assessment tax return)
- Exempting remuneration for duties performed overseas regardless of remittance to the UK
- Capped at the lower of £300,000 or 30% of the employee’s global income per tax year
This relief can be applied to employment income earned wholly or in part outside of the UK.
Do you need advice on claiming OWR?
At present, the OWR system does not entitle the claimant to the Income Tax Personal Allowance or the exempt amount for Capital Gains Tax when using the remittance basis.
While the remittance basis will be abolished, the new OWR system will be the same in this regard, as claiming OWR for a particular tax year will result in losing both of these allowances.
You can find the technical note from HMRC detailing the reformation of the taxation of non-UK domiciled individuals online, covering OWR on pages 12–16.
If you’re an employer of UK non-domiciled employees or a UK non-domiciled employee yourself, and you’re confused about qualifying for or claiming overseas workday relief under the current or upcoming tax rules, it may be best to seek professional guidance.
Our accountants in Barnsley would be glad to advise you on OWR rules and assist you with claiming tax reliefs to your full eligibility, so be sure to contact gbac for expert assistance.
Speak to one of our financial advisers by calling 01226 298 298, or email your details to info@gbac.co.uk and we will get back to you promptly with more helpful information.