Qualifying new resident
UK residence and the preceding ten-year non-residence history are checked before OWR calculations begin.
Overseas Workday Relief can reduce UK tax on qualifying employment income attributable to duties performed outside the UK by eligible new UK residents. Since 6 April 2025 the relief operates under the new residence-based regime rather than the old remittance-basis rules.
OWR is not simply calculated by counting travel days. Eligibility, qualifying years, the employment concerned, the period to which the earnings relate, UK and overseas workdays, deductions, split-year treatment and the annual financial cap can all affect the amount that can actually be relieved.
Give us your first UK-resident tax year, employer, expected overseas workdays and approximate employment income.
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The first questions are whether the employee is a qualifying new resident, whether the employment falls within the relief and which duties were actually performed outside the UK during the relevant qualifying year.
An employee can perform substantial overseas duties and still receive less relief than a simple workday percentage suggests. The qualifying foreign employment income first has to be calculated under the statutory rules and is then subject to the annual financial limit.
The service can be used prospectively before an employee starts UK work or retrospectively when preparing the relevant Self Assessment claim.
UK residence and the preceding ten-year non-residence history are checked before OWR calculations begin.
Travel and employment records are reviewed to distinguish UK workdays, foreign workdays and non-working days.
Salary, bonuses, benefits and other relevant employment income are matched to the period and duties to which the income relates.
The qualifying foreign employment income is compared with the statutory 30% and £300,000 annual cap.
Where the year is split, OWR is considered only in relation to relevant employment income attributable to the UK part of the year.
The required OWR election and quantified relief claim are reflected consistently in the employee's Self Assessment return.
OWR is calculated from the employment and workday evidence first, before the annual statutory cap and claim consequences are applied.
We establish UK residence, prior non-residence and the employee's available qualifying years.
Travel calendars, employer records and work locations are used to separate UK and overseas duties.
Relevant employment income and deductions are allocated before applying the financial limit.
The final OWR election and relief claim are reported through Self Assessment within the applicable time limit.
From 6 April 2025 OWR is tied to qualifying-new-resident status rather than domicile or the old remittance-basis conditions.
OWR relief depends on the period for which employment income is earned, not merely the tax year in which cash happens to be received. Deferred bonuses, securities income and other employment-related amounts can therefore require a more detailed allocation than ordinary monthly salary.
HMRC's current guidance covers eligibility, qualifying employment income, workday apportionment, elections and split-year interaction.
Official OWR guidance ↗HMRC's Employment Income Manual explains the qualifying-new-resident test and its relationship with the four-year FIG framework.
HMRC eligibility guidance ↗The overseas workday percentage is not necessarily the final amount relieved. The statutory cap and the consequences of making the OWR election must be applied afterwards.
The OWR election should therefore be modelled using the employee's complete tax position. For an individual with a relatively small amount of overseas-duty income, surrendering the Personal Allowance and annual exempt amount can reduce the net benefit of making the election.
HMRC confirms that the annual limit is the lower of 30% of relevant qualifying employment income and £300,000.
Financial limit guidance ↗HMRC's manual explains the Self Assessment time limit for making the OWR election and relief claim.
Claim time-limit guidance ↗OWR relies on residence status and often sits alongside FIG claims, foreign pension issues and broader employment-tax reporting.
The amount relieved depends on residence, qualifying years, workdays and the employment income attributable to the overseas duties.
Subject to transitional rules, OWR is available to qualifying new UK-resident employees who were non-UK resident for the required prior ten-year period and perform relevant employment duties outside the UK.
Under the new residence-based regime, a qualifying new resident can potentially qualify in up to four UK-resident tax years within the statutory four-year period.
Workday apportionment is commonly a just and reasonable basis for ordinary salary, but particular income such as bonuses, share awards and deferred remuneration can require more detailed analysis.
For the post-April 2025 regime the annual financial limit is the lower of 30% of relevant qualifying employment income and £300,000.
No. Under the current regime, qualifying employment income does not need to be kept offshore and can be remitted to the UK without the old remittance-basis restriction.
Yes. Making an OWR election for a qualifying tax year removes the Personal Allowance and CGT annual exempt amount for that election year.
Yes, but under split-year treatment OWR applies to relevant employment income attributable to overseas duties in the UK part of the split tax year.
The employee makes the statutory OWR election and relief claim through Self Assessment. Payroll arrangements can sometimes affect cash-flow during the year, but the underlying personal claim still needs to be considered correctly.