Overseas Workday Relief is a tax relief available to UK Non-Domiciles utilising the remittance basis of taxation who work abroad during the tax year. It effectively enables a non-domicile to legitimately avoid paying tax on earnings from a UK employment when duties are performed wholly or partly overseas. This relief is available for the initial year of residence in the U.K., and the two following tax years.
Overseas Workday Relief eligibility criteria
To be able to claim Overseas Workday Relief, you will need to meet the following criteria:
- Be classed as a Non-Dom in the UK and be utilising the remittance basis of taxation.
- Be considered a non-resident of the UK for the 3 previous tax years but be considered a UK tax resident in the year you are claiming the tax relief.
- Perform some or all your work duties outside of the UK.
- Pay foreign earned income into an eligible non-UK bank account and not remit the earnings into the UK.
- Keep accurate records of your movements and work records to provide evidence you have not remitted any foreign earned funds into the UK.
Changes in Overseas Workday Relief from April 6, 2025
The Chancellor of the Exchequer, Jeremy Hunt, in the Spring Budget on 6 March 2024, made a significant change to OWR based on the new Foreign Income and Gains (FIG) Regime. The new regime will allow the individual who performs some or all work duties outside of the UK to remit this income into the UK for the first 4 years of UK residence tax free.
This will make a significant simplification of the current rules regarding bank account structure and determining exactly what earnings have been remitted to the U.K. It will allow individuals to bring money to the U.K. to fund their living costs without worrying about triggering an additional U.K. tax charge. However, travel diaries will need to be maintained very carefully.
For further details of the rules relating to Foreign Income and Gains (FIG) Regime.
