Concept
Overseas Workday Relief is the employment-income counterpart to the FIG regime: where a qualifying new resident performs employment duties both inside and outside the UK, the pay tied to the overseas duties can be kept out of UK tax. It relieves duties performed abroad — not foreign salary as such — and reaches bonuses and equity only so far as they trace to those duties. From 6 April 2025 the relief runs on the same residence test as the FIG regime rather than on domicile and the remittance basis.
OWR turns on workdays, so the proof is a calendar, not a job title. Eligibility is a residence question — ten tax years spent outside the UK before arrival — while the size of the relief is an evidence question, settled by how well each overseas duty day is documented.
From a non-dom relief to a residence test
Until 6 April 2025 OWR lived inside the non-dom system. It reached only employees who were not UK domiciled, who claimed the remittance basis, and who kept the overseas earnings in a qualifying offshore account; it ran for the first three tax years of residence and had no ceiling. The 2025 non-dom reform cut those moorings. OWR now rides on the residence-based FIG regime, reaches anyone who clears the ten-year non-residence test whatever their domicile, lasts four years rather than three, and carries a cap — but the earnings may be paid into a UK account instead of being trapped offshore.
The rule
A qualifying new resident — defined in section 845B ITTOIA 2005 as someone who was not UK resident in any of the ten tax years before the year of arrival — can claim OWR on employment income that relates to duties performed outside the UK, for up to four qualifying years: the year of arrival and the next three tax years, each counting only if the person is UK resident in it. Each qualifying year carries its own annual limit: the lower of 30% of qualifying employment income or £300,000. The limit is applied to each qualifying year separately and does not carry forward — an unused margin in one year does not raise the ceiling in the next, and there is no pooled £1.2m across the four. An election is made for each qualifying year in that year's return (ITEPA s. 41M); relief on that year's earnings is then claimed in the return for every tax year in which they are taxed, and all those claims share that qualifying year's one limit (ss. 41P and 41R). EIM43560 ties eligibility to the residence-based FIG framework — being eligible for FIG is enough, with no separate FIG claim required — and EIM43600 sets 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 does nothing for investment income, dividends, trust distributions or trading profits outside an employment contract.
The test
The analysis runs through five questions: is the person a qualifying new resident under the Statutory Residence Test; is the employment performed partly outside the UK; which earnings relate to qualifying foreign duties; do any bonuses or securities awards relate to qualifying years; and how does the cap bite. Earnings are split between UK and overseas duties on a just-and-reasonable basis, normally by workday count.
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 cuts UK tax on qualifying foreign employment income, and — unlike the old regime — that income can now land in a UK account. The foreign employment election costs the personal allowance, the annual exempt amount and relief for foreign losses of that year, the same trade-off as a FIG claim. Payroll, PAYE, employer reporting and shadow-payroll treatment often turn material even when the individual's position is clear. Income from an earlier qualifying year can still attract relief when it is paid later, but only if an election was made for that year. Once the four years end, the employee moves to worldwide taxation on the same earnings.
Transitional rules
An employee who became UK resident in 2023/24 or 2024/25 and claimed OWR on the remittance basis keeps a route through the change. If they are not a qualifying new resident for 2025/26, they can run OWR to the end of their third tax year of residence; if they are, they reach the full four years. Relief for those years from 2025/26 onwards runs under the new regime, so it needs an OWR election as well as a claim, and the 30% / £300,000 cap does not bite on those years, all of which end before 6 April 2028. An employee who arrived in 2022/23 and claimed the old relief gets no OWR for 2025/26, even as a qualifying new resident. Employment income for a pre-2025 period still taxed on the remittance basis must still be paid into a qualifying offshore account and kept offshore to keep the relief. The special mixed fund rules no longer apply after 5 April 2025, so former qualifying accounts are now treated as ordinary mixed funds (EIM43667). EIM43605 sets out the transitional map.
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.
The employer's side
PAYE does not switch off because relief is due. The employer still operates payroll, but can notify HMRC of its best estimate of the share of pay that is qualifying foreign employment income (ITEPA s. 690D); once HMRC acknowledges the notice, that share is kept out of PAYE, so the employee is not over-withheld and left to reclaim. From 2026/27 the share that can be notified is capped at 30%, in step with the relief's own limit. Agreeing that proportion early and feeding it into payroll — alongside any shadow-payroll obligations where the employer is foreign — is what keeps the relief from becoming a year-long cash-flow loan to HMRC.
Equity compensation and RSUs
The finest-grained area is securities income — RSUs, options and other employment-related securities, which follow their own equity plan logic. That income is treated as accruing evenly over the period between grant and vest, so OWR reaches the portion falling in qualifying years with overseas duties, even where the gain itself is realised later. HMRC's own example: an option granted on 6 April 2025 and exercised two years later with a gain of £100,000 accrues equally over the two years; if a quarter of the duties in the first year were performed abroad and an OWR election was made for that year, roughly £12,500 falls within the relief. Fixing the election for the first year matters: relief cannot be extended retrospectively over the tail of the income.
Tail income and the TRF
Income for duties performed before 6 April 2025 but paid later — the classic case being a prior-year bonus — stays inside the old remittance basis regime: to preserve the relief it must still be held in a qualifying offshore account (EIM43610). For offshore balances already accumulated there is a time-limited window, the Temporary Repatriation Facility (RDRM70000). Amounts designated in the 2025/26 and 2026/27 tax years are charged at 12% and at 15% for 2027/28; the window closes on 5 April 2028. Once the charge is paid the money can be remitted in any later year with no further UK tax — the rate follows the year of designation, not the year of transfer. Finance Act 2026 rewrote the designation machinery with retrospective effect: it defined a “remittance provision”, and the full set of reliefs now requires two designations of the same amount — one made on that basis and one not. That makes 2025–2028 the natural window for clearing old offshore balances and reconciling them with the new regime.
Planning
OWR planning belongs with the employment contract, the payroll set-up and the return, and should be settled alongside the FIG position before UK residence begins. The aim is a clean, evidenced workday pattern rather than an engineered one, with the loss of allowances and the cap modelled against 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.