| What | no UK income tax on pay for work done outside the UK |
| Who | employees in their first 4 years in the UK after at least 10 years outside |
| Cap | 30% of relevant employment income or £300,000, whichever is lower, per year |
| Claim | election and claim in the Self Assessment return |
| Account | paid into a UK or foreign account, it makes no difference |
| Employer | can limit PAYE to as little as 70% of pay (notification to HMRC) |
| Updated | November 2026 |
What overseas workday relief is
If you are UK resident, you are in principle taxed in the UK on all your income, including pay for days you work in Vienna, Copenhagen or Paris. Overseas workday relief, or OWR, takes the part of your pay that relates to work outside the UK out of UK income tax in your first years after arriving.
Until 5 April 2025 OWR hung on the remittance basis: the overseas part stayed tax-free only while it stayed abroad. Since 6 April 2025 it sits in the new, purely residence-based system. Non-dom status no longer matters, and you can be paid into a UK or a foreign account without changing the relief. Covered are salary and benefits, employment-related securities income and pay through third parties, so far as they relate to work outside the UK.
For your other foreign income there is the four-year FIG regime. It expressly does not cover foreign employment income; that is what OWR is for.
Who gets the relief
OWR is available for a tax year in which you qualify for the FIG regime, that is in your first four years in the UK after at least ten years outside. Whether you are resident under the statutory residence test decides when it starts. You do not have to make a FIG claim for your other foreign income; being eligible is enough.
Domicile no longer counts. Brits returning after ten years abroad can get OWR too. And it can be used again: if ten years outside lie between two UK stays, the clock starts afresh.
Arrivals in 2023/24 and 2024/25 have transitional rules. Anyone who used OWR with the remittance basis back then keeps it for their first three years in the UK, and as a new resident for FIG purposes even for four. For this group the new cap does not apply until 5 April 2028.
The cap: 30 percent or £300,000
Since April 2025 OWR is capped, for each qualifying year, at the lower of 30% of relevant employment income and £300,000. Relevant means pay from employments you carry on partly in the UK and partly abroad. Three worked examples:
| Annual pay | Share of days abroad | Overseas pay | Cap | Relief |
|---|---|---|---|---|
| £150,000 | 20% | £30,000 | £45,000 (30%) | £30,000 |
| £200,000 | 40% | £80,000 | £60,000 (30%) | £60,000 |
| £1,500,000 | 35% | £525,000 | £300,000 (maximum) | £300,000 |
HMRC, EIM43600 Financial limit; examples worked by St Matthew
What counts as work abroad
How much of your pay relates to work outside the UK is worked out on a just and reasonable basis, in practice usually by counting working days. The old rule treating incidental duties abroad as UK work was expressly not carried over into the new OWR.
If you arrive mid-year and a split year applies, only pay from the UK part of the year can qualify; for the overseas part you are largely treated as non-resident anyway. Bonuses paid for a qualifying year but received later can be claimed in the year they are received. The cap applies per qualifying year and is aggregated across the years.
The employer's side: PAYE on part of the pay
Left alone, your employer deducts PAYE on all your pay, and you only get the relief back through your tax return. There is a better way: the employer can notify HMRC online that it will apply PAYE only to the part of the pay relating to UK work. The form used to be called the section 690. The employer needs a Government Gateway account for the notification and can apply the reduced deduction as soon as HMRC acknowledges receipt.
For new residents the estimated share on which no PAYE is due is capped at 30 percent, so that the running deductions match the cap in the return. A notification covers only the current tax year; every further year needs a new one, and an updated one if your circumstances change. Employees on a net-of-tax deal can run through the modified PAYE scheme, whose estimate can include OWR provisionally. You must file a tax return either way.
For businesses abroad sending staff to the UK, this belongs in the running payroll. How we organise UK payroll for you is on the UK Payroll page.
The price, and the tax treaty
OWR has a price: elect for it in a year and you lose the personal allowance and the capital gains tax annual exempt amount for that year, just as with a FIG claim. With only a few days abroad that can cost more than the relief brings. So do the sums before you elect.
Then there is the treaty. If you are UK resident and work some days in another country, that country may tax the pay for those days under the employment article of its treaty with the UK, unless the 183-day exception applies; it often will not, for instance where your employer is based there. OWR then makes sure the UK does not tax those days on top in your first years. The principles are in the UK's tax treaties.
Frequently asked questions
Do I still need an offshore account for overseas workday relief?
No. Since 6 April 2025 you can receive the relieved pay into a UK or a foreign account; the relief is the same.
How long do I get OWR?
For each tax year in which you qualify for the FIG regime, so at most your first four years in the UK after at least ten years outside. Each year needs its own election in the return.
Does OWR apply to the self-employed?
No, it concerns employment income. Profits of a trade carried on wholly outside the UK fall under the FIG regime.
What if my overseas share is above 30 percent?
Then you pay UK tax on the rest, even though it relates to days abroad. The cap of 30 percent or £300,000 applies per qualifying year.
Does my employer have to be in the UK?
OWR follows your residence and where you work. If your employer has a UK PAYE registration, it can make the notification to HMRC; otherwise you claim the relief through your return.
Sources: HMRC Manual: EIM43555 Overseas Workday Relief, overview; HMRC Manual: EIM43560 Eligibility; HMRC Manual: EIM43580 Making a claim for relief; HMRC Manual: EIM43600 Financial limit; HMRC Manual: EIM43605 Transitional provisions; GOV.UK: Tell HMRC that you'll operate PAYE on a proportion of an employee's income; GOV.UK: Aligning PAYE and Overseas Workday Relief; GOV.UK: Check if you can claim the 4-year foreign income and gains regime
