How is Overseas Workday Relief calculated?

OWR is calculated by apportioning employment income between UK workdays and overseas workdays. The overseas portion is exempt from UK tax during the 4-year FIG relief period. The calculation is typically based on the proportion of total workdays performed overseas. The OWR calculation apportions employment income between UK workdays and overseas workdays. The overseas portion is exempt from UK tax (during the 4-year FIG period). The calculation steps: (1) Determine total workdays — count all working days in the tax year (excluding weekends, holidays, and sick leave). (2) Categorise workdays — classify each workday as UK or overseas, based on where the work was performed. (3) Calculate the overseas proportion — overseas workdays ÷ total workdays. (4) Apply the proportion to employment income — multiply total employment income by the overseas proportion to determine the exempt amount. Travel days (days spent travelling for work) are generally treated as workdays and allocated based on the destination. Training days and leave days are generally excluded from the calculation. The calculation should be documented in case of HMRC enquiry. Relevant legislation: Finance Act 2025, Sections 8-15 (FIG regime); ITEPA 2003, Section 336 (OWR calculation principles). Example: An employee has 250 total workdays in the tax year: 175 in the UK and 75 overseas. The overseas proportion is 75/250 = 30%. If total employment income is £400,000, the exempt amount is £120,000 (30% of £400,000). Only £280,000 is subject to UK income tax. Common mistake: Including travel days, training days, or leave days in the workday count incorrectly. The treatment of these days can affect the overseas proportion and the amount of relief claimed.

Who qualifies for Overseas Workday Relief?

OWR under the FIG regime is available to new arrivals who qualify for the 4-year FIG relief: individuals who have been non-UK-resident for at least 10 consecutive years before becoming UK resident. Existing non-doms who were on the remittance basis before April 2025 do not qualify for the FIG regime OWR. To qualify for OWR under the FIG regime: (1) The individual must qualify for the FIG regime — this requires 10+ consecutive years of non-UK-residence immediately before becoming UK resident. (2) The individual must be within their 4-year relief period (the first 4 tax years of UK residence). (3) The employment income must relate to workdays performed outside the UK. (4) The relief must be claimed on the self-assessment return. Existing non-doms who were on the remittance basis before 6 April 2025 do not qualify for the FIG regime OWR. They may be eligible for transitional provisions (including 50% relief on foreign income in 2025/26), but the old OWR (which required income to be kept offshore) is no longer available. Relevant legislation: Finance Act 2025, Sections 8-15 (FIG regime eligibility). Example: An individual who has been non-UK-resident for 12 years moves to the UK in June 2025. They qualify for the FIG regime and OWR. An individual who has been UK-resident for 5 years (on the remittance basis) does not qualify for the FIG regime or OWR — they get transitional provisions instead. Common mistake: Assuming that OWR is available to anyone who works partly overseas. Under the FIG regime, it is only available to new arrivals (10+ years of non-residence) within their 4-year relief period.

Do I need to keep my overseas income offshore for OWR?

No. Under the FIG regime (from April 2025), OWR exempts overseas employment income regardless of whether it is remitted to the UK. This is more generous than the pre-2025 rules, which required income to be kept offshore. Under the FIG regime (from 6 April 2025), OWR exempts overseas employment income regardless of whether it is remitted to the UK. This is a significant change from the pre-2025 rules. Under the old remittance basis, OWR was only available if the overseas employment income was kept offshore (not remitted to the UK). If any part was remitted, the relief was lost for the remitted portion. This created practical difficulties, as employees needed to maintain separate bank accounts and carefully track which funds were remitted. Under the FIG regime, these restrictions no longer apply — overseas employment income is exempt during the 4-year period, whether or not it is remitted to the UK. This simplifies the administration of OWR and allows employees to bring their overseas income to the UK without losing the relief. Relevant legislation: Finance Act 2025, Sections 8-15 (FIG regime — no remittance requirement); ITEPA 2003, Section 336 (pre-2025 remittance requirement). Example: Under the pre-2025 rules, an employee earning £100,000 overseas had to keep the £100,000 in a foreign bank account to claim OWR. If they transferred £20,000 to a UK bank account, they lost the relief on that £20,000 and it became subject to UK tax. Under the FIG regime, the £100,000 is exempt regardless of whether it is transferred to the UK. Common mistake: Continuing to follow the old remittance basis rules (keeping income offshore) after April 2025. Under the FIG regime, this is no longer necessary — the income is exempt regardless of where it is held.

What records do I need for Overseas Workday Relief?

You need detailed records of your workdays: dates, locations (UK or overseas), travel days, and the calculation of the overseas proportion. HMRC can request evidence for up to 6 years, so records should be kept throughout the relief period. To support an OWR claim, you should maintain: (1) A workday diary — a record of each workday, showing the date, location (UK or overseas), and nature of the work. (2) Travel records — boarding passes, flight tickets, and hotel receipts that evidence the location of workdays. (3) Employer confirmation — a letter from the employer confirming the workday split and the employment income. (4) Calculation worksheet — showing the total workdays, overseas workdays, overseas proportion, and exempt amount. (5) Bank statements — showing the payment of employment income. HMRC can request evidence for up to 6 years after the tax year, so records should be kept throughout the relief period and beyond. Without adequate records, HMRC may challenge the OWR claim and seek to recover the relief. Relevant legislation: Finance Act 2025 (FIG regime — record-keeping requirements); TMA 1970, Section 12B (self-assessment record-keeping). Example: An employee claiming OWR for 2025/26 should keep: a diary of all 250 workdays showing UK/overseas location, boarding passes for overseas travel, a letter from the employer confirming the workday split, and the calculation showing 30% overseas proportion and £120,000 exempt amount. Common mistake: Not keeping detailed workday records. HMRC can challenge the OWR claim years later, and without evidence of the workday split, the relief may be disallowed.

International Tax › Employment

Overseas Workday Relief (OWR)

OWR provides relief from UK tax on employment income for work performed outside the UK. Understand how it works under the FIG regime, the 4-year period, and how to claim.

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Overseas Workday Relief (OWR) allows UK-resident individuals to claim relief from UK tax on employment income relating to workdays performed outside the UK. Under the pre-2025 remittance basis, OWR was available with conditions. Under the new FIG regime (from April 2025), OWR is part of the 4-year relief for new arrivals, providing a simpler and more generous form of relief for qualifying individuals.

OWR Under the FIG Regime

Under the FIG regime (from 6 April 2025), OWR is available to new arrivals who qualify for the 4-year FIG relief. During the 4-year relief period, foreign employment income (income from work performed outside the UK) is not subject to UK tax, regardless of whether it is remitted to the UK. This is more generous than the pre-2025 OWR, which required the income to be kept offshore (non-remitted).

Eligibility

To qualify for OWR under the FIG regime: (1) The individual must qualify for the FIG regime (10+ years of non-residence before becoming UK resident). (2) The individual must be within their 4-year relief period. (3) The employment income must relate to workdays performed outside the UK. (4) The relief must be claimed on the self-assessment return.

Calculating the Relief

The OWR calculation apportions employment income between UK workdays and overseas workdays. The overseas portion is exempt from UK tax (during the 4-year period). The calculation is typically based on the proportion of workdays performed overseas. For example, if 30% of workdays are overseas, 30% of employment income is exempt. The calculation must be done carefully, considering travel days, training days, and leave days.

Pre-2025 OWR (Transitional)

For existing non-doms who were using the remittance basis before 6 April 2025, the old OWR rules applied. Under the old rules, OWR was available on the remittance basis, meaning overseas employment income was only exempt if it was not remitted to the UK. If any part was remitted, the relief was lost for the remitted portion. The transitional provisions for existing non-doms include 50% relief on foreign income in 2025/26, but OWR under the old rules is no longer available.

Key Points

What You Need to Know

OWR under the FIG regime exempts overseas employment income for 4 years (new arrivals)
The relief is available regardless of whether income is remitted to the UK
The calculation apportions income based on UK vs overseas workdays
Eligibility requires 10+ years of non-residence before becoming UK resident
The relief must be claimed on the self-assessment return

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Statutory Residence Test (SRT)Non-Dom Reforms April 2025 Overseas Workday Relief (OWR)Split-Year Treatment Double Taxation Treaties Transfer Pricing Permanent Establishment (PE)Controlled Foreign Companies (CFC)Withholding Tax on Cross-Border Payments Inbound Property Investment Outbound Expansion Structuring Cross-Border Employment Taxation Diverted Profits Tax (DPT)Anti-Hybrid & Mismatch Rules Corporate Interest Restriction Exit Charges & Company Migration Cross-Border Trust Taxation

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