If you’ve recently moved to the UK for work and spend part of your time working overseas, Overseas Workday Relief (OWR) could significantly reduce your UK tax bill.
OWR allows qualifying individuals to pay UK tax only on income earned from UK workdays, while income relating to overseas workdays can remain outside UK tax — provided strict conditions are met and the income is not remitted to the UK.
This page explains:
- what Overseas Workday Relief is
- who qualifies
- how it is calculated
- how to claim it correctly on your UK Self-Assessment tax return
What Is Overseas Workday Relief?
Overseas Workday Relief (OWR) is a UK tax relief available to certain individuals who:
- are UK tax resident
- are non-UK domiciled (under pre-2025 rules)
- perform part of their employment duties outside the UK
Under OWR, your employment income is split between:
- UK workdays → taxable in the UK
- overseas workdays → not taxed in the UK, if kept offshore
OWR applies for:
- the tax year of arrival, and
- the next two full tax years
(subject to transitional rules)
Important Update: Changes From April 2025
From 6 April 2025, the UK is replacing domicile-based taxation with the Foreign Income and Gains (FIG) regime.
For the 2024/25 tax year, Overseas Workday Relief still applies under existing rules.
Transitional rules mean:
- some individuals can continue claiming OWR
- others may transition into the FIG regime
Correct advice and reporting are essential during this period.
How Overseas Workday Relief Works in Practice
Your employment income is apportioned based on workdays:
The overseas portion can be excluded from UK tax if:
- it relates to duties performed outside the UK
- it is paid into a qualifying offshore bank account
- it is not remitted to the UK
If your employer does not operate OWR through payroll, you must claim it via Self Assessment.
Who Qualifies for Overseas Workday Relief?
To qualify, you must:
- be UK tax resident
- have been non-UK resident for 3 consecutive tax years out of the previous 5
- perform employment duties both in and outside the UK
- claim the remittance basis (where applicable)
Failure to meet any of these conditions can invalidate the relief.
Offshore Bank Account Requirements
To benefit fully from OWR, overseas earnings must be paid into a qualifying non-UK bank account that:
- is solely in your name
- contains only employment income from one employment
- has a balance of less than £10 when income is first paid in
Best practice:
- open the account before arriving in the UK
- use a separate account each tax year
- formally nominate the account on your tax return
HMRC frequently audits OWR claims — poor record-keeping is a major risk.
Overseas Workday Relief Cap
OWR is capped at the lower of:
- 30% of qualifying employment income, or
- £300,000 per tax year
Transitional rules:
- pre-April 2025 claimants may continue under existing caps
- individuals eligible for the new FIG regime may claim for up to four years, with no annual cap
How to Claim Overseas Workday Relief
Option 1: Through Payroll
If your employer has a PAYE apportionment agreement (formerly “690 agreement”), UK tax is deducted correctly at source.
Option 2: Through Self Assessment
If not, you must:
- file a UK Self-Assessment tax return
- complete the employment and residence pages
- include OWR calculations
- nominate the offshore account
- ensure remittance rules are followed
OWR must be elected by 31 January following the end of the tax year.
Electing OWR:
- forfeits your personal allowance
- forfeits your capital gains annual exemption
Example: Overseas Workday Relief Calculation
John moves to the UK on 6 April 2025
- Total employment income: £600,000
- Total workdays: 240
- Overseas workdays: 120
Step 1: Calculate overseas portion
120 ÷ 240 = 50%
£600,000 × 50% = £300,000
Step 2: Apply OWR cap
30% of £600,000 = £180,000
Cap applies → £180,000
Step 3: UK taxable income
£600,000 − £180,000 = £420,000
John reports this on his UK Self-Assessment tax return, with supporting records.
Common OWR Mistakes We See
- claiming OWR without qualifying non-residence
- using mixed or non-qualifying bank accounts
- poor workday records
- remitting overseas income unintentionally
- missing the election deadline
- incorrect payroll vs Self-Assessment treatment
HMRC enquiries into OWR are common and penalties can be severe.
How We Help With Overseas Workday Relief
We specialise in international and expat UK tax returns, including:
OWR eligibility reviews Workday apportionment calculations Offshore account compliance Self-Assessment filing PAYE vs Self-Assessment strategy Transitional rule planning (pre- & post-2025)
Get Expert Help With Overseas Workday Relief
If you:
- recently moved to the UK
- work internationally
- earn high employment income
- want to reduce UK tax legally
We’ll ensure your Overseas Workday Relief is claimed correctly and defensibly.
FAQs: Overseas Workday Relief
What is Overseas Workday Relief?
A UK tax relief allowing qualifying individuals to exclude income relating to overseas workdays from UK tax, subject to conditions.
Who qualifies for OWR?
UK-resident individuals who were non-resident for 3 out of the previous 5 tax years and who perform duties outside the UK.
How long can OWR be claimed?
Generally the year of arrival plus two further tax years, subject to transitional rules.
How is OWR claimed?
Either through payroll (if agreed) or via your UK Self-Assessment tax return.
What happens if I remit overseas income to the UK?
Any remitted amount becomes taxable in the UK, even if it relates to overseas workdays.
