If you’ve recently moved to the UK after living overseas, you may be able to reduce your UK tax bill through Overseas Workday Relief (OWR).
From 6 April 2025, the UK introduced a new Foreign Income and Gains (FIG) regime, replacing the previous non-dom rules.
One of the key reliefs available under the new regime is Overseas Workday Relief (OWR), which can exempt part of your employment income from UK tax if you perform duties outside the UK.
For internationally mobile employees, this relief can be worth tens or even hundreds of thousands of pounds over the first four years of UK residence.
In this guide, we explain who qualifies, how the relief is calculated and the common mistakes to avoid.
What is Overseas Workday Relief?
Overseas Workday Relief (OWR) is a UK tax relief for employees who:
- Become UK tax resident;
- Perform employment duties both inside and outside the UK; and
- Meet the qualifying conditions under the new Foreign Income and Gains (FIG) regime.
Broadly, the relief exempts the portion of your employment income relating to duties performed outside the UK.
Who Can Claim Overseas Workday Relief?
To qualify, you must be a Qualifying New Resident.
This means you must have been non-UK resident for at least ten consecutive UK tax years before becoming UK resident.
If you satisfy this condition, OWR can generally be claimed for up to four UK tax years.
If you do not meet the ten-year requirement, you may still qualify under the transitional rules if you were already claiming OWR before 6 April 2025. (Read our separate guide on the transitional rules.)
What Employment Income Qualifies?
OWR can apply to most forms of employment income, including:
- Salary
- Bonuses
- Benefits in kind
- Taxable termination payments
- Certain employment-related securities and share option income
Allowable employment expenses, such as qualifying business travel or pension contributions, are deducted before calculating the relief.
Only the income relating to duties performed outside the UK qualifies for Overseas Workday Relief.
How Is Overseas Workday Relief Calculated?
The calculation is normally based on your UK and overseas workdays.
The basic formula is:
Qualifying employment income × Overseas workdays ÷ Total workdays
Example
Sarah moves to the UK after living overseas for more than ten years.
During 2025/26, she earns £552,000 after allowable employment expenses.
She works:
- 230 total workdays
- 60 overseas workdays
Her Overseas Workday Relief is:
£552,000 × 60 ÷ 230 = £144,000
This means £144,000 of her employment income is exempt from UK income tax.
Is There a Limit on the Relief?
Yes.
The amount of Overseas Workday Relief is limited to the lower of:
- 30% of qualifying employment income, or
- £300,000.
Example
In the following tax year, Sarah earns £600,000.
Her overseas workdays represent one-third of her total working time.
Although the overseas element of her salary is £200,000, the annual limit applies.
Thirty per cent of £600,000 is £180,000, so her Overseas Workday Relief is restricted to £180,000.
How Do You Claim Overseas Workday Relief?
The relief is not automatic.
You must make an election and claim through your UK Self-Assessment tax return.
Missing the claim deadline could mean losing the relief for that tax year.
Professional advice is recommended before making an election.
Is Overseas Workday Relief Always the Best Option?
Not necessarily.
Many people assume they should always claim OWR.
However, where overseas earnings have already been taxed abroad, claiming Double Tax Relief instead may sometimes produce a better overall result.
This is because claiming OWR means:
- The qualifying overseas earnings become exempt from UK tax.
- No foreign tax credit can be claimed on exempt income.
- Certain UK tax reliefs are lost, including the Personal Allowance and the Capital Gains Tax Annual Exempt Amount.
Every case should therefore be modelled before making an election.
Common Mistakes We See
Some of the most common mistakes include:
- Assuming every new UK resident qualifies for Overseas Workday Relief.
- Forgetting that you must satisfy the ten-year non-UK residence test.
- Failing to keep accurate records of overseas workdays.
- Missing the deadline for making the claim.
- Assuming OWR always produces the lowest tax bill without comparing it to Double Tax Relief.
Obtaining professional advice before filing your tax return can prevent costly mistakes.
Frequently Asked Questions
Can I receive my salary into a UK bank account?
Yes.
Under the new FIG regime, Overseas Workday Relief is available regardless of where your employment income is paid.
Unlike the previous non-dom regime, you do not need to keep the income outside the UK.
How long can I claim Overseas Workday Relief?
If you qualify, relief is generally available for your first four UK tax years.
Does OWR apply if I only spend a few days working overseas?
Potentially, yes.
The relief is normally calculated by reference to your overseas workdays, so even a relatively small number of overseas working days may generate some relief.
How FKGB Accounting Can Help
If you have recently moved to the UK and continue to travel overseas for work, Overseas Workday Relief could significantly reduce your UK tax liability.
At FKGB Accounting, we specialise in advising internationally mobile employees and expatriates on the UK’s new FIG regime.
We can:
- Confirm whether you qualify for Overseas Workday Relief.
- Calculate your available relief.
- Compare OWR with Double Tax Relief.
- Prepare your UK Self Assessment tax return.
- Advise on UK residence and international tax planning.
If you are moving to the UK or have already become UK tax resident, please get in toucheither by email shimshon.goodman@fkgb.co.uk or book a zoom meeting on my calendar – https://calendly.com/shimshon-goodman-fkgb/30min.
