What is Overseas Workday Relief?

Overseas Workday Relief (OWR) lets an eligible new UK resident avoid UK tax on the portion of their employment earnings that relates to duties performed outside the UK. If you work partly abroad in your first years of UK residence, OWR relieves the 'overseas workday' share of your salary, subject to an annual cap. It applies to general earnings, employment-related securities, and employment income through third parties (sections 41T-41V ITEPA 2003).

Who qualifies for Overseas Workday Relief from 2025?

From 6 April 2025, OWR eligibility follows the FIG regime gateway: you must be UK resident for the year and a 'qualifying new resident' - UK resident this year, not UK resident in any of the 10 tax years immediately before, and not a member of the House of Commons or Lords (s845B ITTOIA 2005, EIM43560). Nationality and domicile no longer matter. It is available for your first 4 consecutive years of UK residence.

How long does Overseas Workday Relief last?

The same 4-year window as the FIG regime: your first tax year as a qualifying new resident plus the next 3. After that OWR is no longer available unless you leave the UK for at least 10 consecutive tax years and return as a qualifying new resident again.

Is there a cap on Overseas Workday Relief?

Yes - this is new from 6 April 2025. Relief for a qualifying year is capped at the LOWER of 30% of your relevant qualifying employment income or £300,000 (section 41R ITEPA 2003, EIM43600). The old remittance-based OWR had no such cash limit, so high earners with large overseas-workday proportions are the most affected by the change.

Do I still have to keep the money in an offshore account?

No. Under the old remittance-basis OWR you had to keep the relieved earnings offshore. The reformed OWR removed that: you can be paid into a UK or an overseas bank account and it makes no difference to the relief (EIM43555). The relief is now based on where the work is done, not where the money is held.

How do I claim Overseas Workday Relief?

You make an OWR election (formally a 'foreign employment election') for the qualifying year, then claim the relief on your Self Assessment tax return (EIM43555, EIM43580), within the normal claim time limits. Like a FIG claim, making the election means you lose your personal allowance and CGT annual exempt amount for that year, so it is worth modelling whether the relief outweighs the allowances you give up.

What is the difference between OWR and the FIG regime?

Both are for the same 4-year qualifying-new-resident window, but they cover different income. The FIG regime relieves foreign investment and business income (dividends, interest, foreign trade and property profits, gains). OWR relieves foreign EMPLOYMENT earnings for overseas workdays - which are specifically NOT covered by a FIG foreign income claim (RFIG45100). Someone employed with overseas duties may use OWR; someone with foreign investments uses the FIG regime; some use both.

Overseas Workday Relief Explained: The Reformed OWR (2026)

If you have moved to the UK for a job that still takes you abroad, part of your salary is being earned for work you do outside the UK - and Overseas Workday Relief (OWR) can keep that part out of UK tax for your first few years here. Like the FIG regime that replaced the non-dom rules, OWR was reformed on 6 April 2025: the old "keep it offshore" mechanics are gone, but a new cash cap was introduced. Whether you qualify turns on your UK residence history, which is decided by the Statutory Residence Test.

Key points

OWR relieves the part of your employment earnings for duties performed outside the UK - your "overseas workdays" - from UK tax
From 6 April 2025 it is open to qualifying new residents (the same gateway as the FIG regime) for their first 4 years of UK residence
New from 2025: relief is capped at the lower of 30% of relevant employment income or £300,000 a year
Also new: you no longer have to keep the money offshore - a UK or overseas account makes no difference
You must make an OWR election and claim on your Self Assessment return - and, as with a FIG claim, claiming costs you your personal allowance for that year
Nationality and domicile are irrelevant - eligibility runs on your SRT residence status

What OWR does

Under the general rule, a UK resident is taxed on worldwide employment income, wherever the work is physically done. OWR is an exception for genuinely new arrivals: for the part of your earnings that relates to duties performed outside the UK, OWR removes the UK charge.

It covers three categories of qualifying foreign employment income (EIM43555):

qualifying foreign general earnings - ordinary salary and bonuses (s41T ITEPA 2003)
qualifying foreign securities income - employment-related shares and securities (s41V)
qualifying foreign third-party income - employment income routed through third parties (s41U)

The classic beneficiary is someone who relocates to the UK for a role that still involves significant travel - a consultant, a regional executive, a markets professional - so that a real slice of the work happens on the other side of a border.

Who qualifies: the FIG gateway

Before 6 April 2025, OWR was tied to non-UK domicile and the remittance basis. That link is gone. Eligibility now runs through the same "qualifying new resident" test as the FIG regime (EIM43560, s845B ITTOIA 2005). You are a qualifying new resident for a year if:

you are UK resident for the tax year, and
you were not UK resident in any of the 10 tax years immediately before it, and
you are not a member of the House of Commons or House of Lords

Meet that in your first year and OWR is available for that year plus the next three - a 4-year window. Nationality and domicile do not enter into it. And because the gateway is a residence test, everything hinges on the Statutory Residence Test: you need a defensible view of your UK residence status for the arrival year and the preceding decade. The free SRT calculator works through any year against HMRC's RDR3 guidance and gives a clear determination - the same building block the FIG regime relies on.

The traps are the same residence traps as the FIG regime: a stray year of UK residence, or a departure year with split-year treatment, still counts as a full year of residence and can break the 10-consecutive-year requirement. See the FIG regime guide for how those play out.

The two 2025 reforms that matter most

1. No more offshore banking. The old OWR was a remittance-basis relief: you had to keep the relieved earnings in an offshore account and not bring them to the UK. The reformed OWR dropped that entirely - you can be paid into a UK or an overseas account and it makes no difference to the relief (EIM43555). Relief now depends on where the work is done, not where the money sits.

2. A new annual cap. This is the sting. Relief for a qualifying year is limited to the lower of (section 41R ITEPA 2003, EIM43600):

30% of your relevant qualifying employment income, or
£300,000

The old OWR had no cash ceiling, so the earnings for every overseas workday could be relieved in full. Now, a high earner whose overseas-workday share exceeds these limits will find part of their overseas earnings back in UK tax. For most people the 30% figure bites first; the £300,000 figure caps the very largest packages.

How the relief is worked out

Broadly, OWR relieves the proportion of your qualifying employment income that relates to duties performed outside the UK - your overseas workdays as a share of total workdays - and then applies the financial limit (EIM43590, EIM43600). The detail (qualifying deductions, multiple employments, associated employment) sits in the surrounding EIM pages and is worth an adviser's eye for a real calculation.

Worked example: Sofia, arriving for a travelling role

Sofia has lived and worked in Brazil and has never been UK resident. She moves to London on 6 April 2025 for an employment that has her working abroad about 40% of the time. She is UK resident for 2025-26.

Is she eligible? She is UK resident and was not UK resident in any of the 10 prior tax years, so she is a qualifying new resident. OWR is available for 2025-26 to 2028-29.
Her salary is £200,000. Roughly 40% relates to overseas workdays - about £80,000.
The cap: 30% of her relevant employment income is £60,000; the £300,000 figure is not in play. Relief is the lower of the two, so her OWR is capped at £60,000, not the full £80,000.
She makes an OWR election for 2025-26 and claims the relief on her Self Assessment return. The remaining ~£20,000 of overseas-workday earnings stays in UK tax because of the cap.
Because she makes the election, she loses her personal allowance for 2025-26 - a cost to weigh against the £60,000 relieved.

Change one fact - a single year of UK residence in the last decade - and Sofia would not be a qualifying new resident, and OWR (and the FIG regime) would be closed to her entirely.

The trade-off, and how to claim

OWR is not automatic and it is not free. To claim it you must (EIM43555, EIM43580):

Make an OWR election for the qualifying year, then
Claim the relief on your Self Assessment return, within the normal claim time limits (EIM43585).

And making the election has the same cost as a FIG claim (RFIG43000): for that year you lose your personal allowance, your CGT annual exempt amount, and several other allowances. So OWR only makes sense where the relieved overseas earnings comfortably outweigh the allowances you give up - a per-year calculation worth modelling before you file.

Note too that foreign employment earnings are not "qualifying foreign income" for a FIG foreign income claim (RFIG45100) - OWR is their dedicated route. Someone with both a travelling job and foreign investments may use OWR and the FIG regime in the same year; each is claimed separately.

What this means in practice

If you are moving to the UK for a role with overseas duties:

Confirm your residence status and the 10-year gate. OWR and the FIG regime share the qualifying-new-resident test - a Statutory Residence Test question for the arrival year and the previous decade. Start with the free SRT calculator and, if the SRT is new to you, the complete guide to the SRT.
Track your workdays. OWR is a workday apportionment - keep a clean record of which duties were performed where. If you also spend time abroad, the remote-worker residence guide covers how UK day counting interacts with a mobile working pattern.
Model the cap and the lost allowances before electing - the 30%/£300,000 limit and the loss of your personal allowance both change whether the election is worthwhile.
Elect and claim on your Self Assessment return for each qualifying year.

OWR is a valuable relief for the right arrival - up to four years of UK-tax-free earnings on your overseas workdays. But the gateway is a residence test, the reform added a real cap, and the election carries a cost. Treat this guide as a map of the rules (references are to HMRC's Employment Income Manual, EIM43550 onwards) and take the actual numbers to a qualified adviser before you file.