Concept
Overseas Workday Relief is the employment-income counterpart to the FIG regime, available where a qualifying new resident works both inside and outside the UK. It is a relief on earnings that relate to duties performed abroad, not a general exclusion for foreign salary, bonuses or equity. HMRC's OWR guidance explains that from 6 April 2025 the relief follows the same residence-based qualifying new resident test as FIG.
The rule
HMRC's OWR guidance explains that a qualifying new resident — UK resident after at least 10 consecutive non-UK-resident tax years — can claim OWR on employment income relating to duties performed outside the UK, for up to four qualifying years. From 6 April 2025 the relief is subject to an annual financial limit for each qualifying year: the lower of 30% of qualifying employment income or £300,000. HMRC's EIM43560 links eligibility to the residence-based FIG framework, and EIM43600 sets out the cap.
Scope
OWR is relevant to executives, carried-interest professionals, founders on employment contracts, secondees, employees with RSUs or options, and internationally mobile family office principals. It is not relevant to investment income, company dividends, trust distributions or trading profits outside an employment context.
The test
The analysis asks whether the individual is a qualifying new resident, whether the employment is performed partly outside the UK, which earnings relate to qualifying foreign duties, whether bonuses or securities income relate to qualifying years, and how the financial limit applies. Earnings are apportioned between UK and non-UK duties on a just-and-reasonable basis, normally by workdays.
Election
Made in the Self Assessment return for the qualifying year. Making the election removes the personal allowance and the annual exempt amount for that year.
Apportionment
Qualifying foreign earnings are identified by workdays performed outside the UK. Travel days and UK duties performed remotely are not automatically foreign workdays.
The cap
For each qualifying year the relief cannot exceed the lower of 30% of qualifying employment income or £300,000, applied after allowable deductions.
Consequences
Relief reduces UK taxation on qualifying foreign employment income, received in a UK or overseas account. The election removes the personal allowance and the annual exempt amount for that year. Payroll, PAYE, employer reporting and shadow payroll treatment can become material even where the individual position is clear. Income for an earlier qualifying year can still qualify when received later, but only if an election was made for that earlier year.
Examples
An executive moving to London in 2025/26 with duties performed in New York, Dubai and London needs a workday allocation for salary and bonus, then the cap. A founder receiving RSUs after moving to the UK must test the vesting and duties period rather than assuming the grant date or broker location controls the UK answer. A bonus paid after departure can still attract OWR for the part earned in a qualifying year for which an election was made.
Risk
The risk is weak workday evidence. HMRC will not usually accept broad business-travel narratives where the computation depends on foreign duties. Other risks are treating OWR as available without qualifying new resident status, misapplying the cap, or assuming a foreign employer automatically means foreign-source income. HMRC's EIM43615 addresses artificial workday arrangements.
Evidence
Evidence includes employment contracts, assignment letters, payroll records, travel calendars, workday diaries, board packs, time-zone records, equity award documents, vesting schedules and employer calculations. The file must let each apportioned figure and the cap be reconstructed from source.
Planning
OWR planning should be integrated with the employment contract, payroll system and tax return, and decided alongside the FIG position before the tax year. The client should not create artificial workday patterns, and should model the loss of allowances and the cap against the expected foreign earnings.
Q&A
Is OWR the same as FIG
No. FIG deals with eligible foreign income and gains. OWR deals with qualifying foreign employment income. Both use the residence-based qualifying new resident test.
What is the OWR cap from 6 April 2025
For each qualifying year the relief is limited to the lower of 30% of qualifying employment income or £300,000, applied after allowable deductions.
Does an OWR election affect allowances
Yes. Making an OWR election for a year removes the personal allowance and the annual exempt amount for that year, the same trade-off as an FIG claim.
Can equity compensation qualify
It can, where securities income relates to foreign duties in a qualifying year for which an election was made, but the employment-tax and securities rules must be analysed precisely rather than assumed from the grant date.
Related
Contact information
If you have questions or need a consultation, our experts will be glad to help.
Request a callback
Private.law Attorneys
This material is prepared for public review and may be freely shared.
We work on complex legal matters for demanding clients.
Our site