Answers · UK 2025/26
What is Overseas Workday Relief and who can claim it in the UK?
Overseas Workday Relief (OWR) lets eligible new UK residents avoid UK tax on the portion of their employment earnings relating to duties physically performed outside the UK. It applies in your first few years of UK residence and the relief covers the part of pay tied to overseas workdays, calculated by apportioning total earnings between UK and non-UK duties.
Full answer
Overseas Workday Relief (OWR) is a relief for people who become UK tax resident after a period of non-residence and who carry out some of their employment duties abroad. It recognises that an internationally mobile employee should not necessarily be fully taxed in the UK on pay earned for work physically done overseas during their early years here. The mechanism is apportionment. Your total employment income is split between UK workdays and overseas workdays, usually on a just-and-reasonable day-count basis. The earnings attributable to UK duties are taxed as normal under UK rules -- against the Personal Allowance of GBP 12,570 and the bands (20% to GBP 50,270, 40% to GBP 125,140, 45% above), with employee National Insurance at 8% then 2%. The earnings linked to genuine overseas workdays can be relieved from UK tax, subject to the qualifying conditions and the rules applying for the year in question. The relief is available only for a limited number of tax years from the point you become UK resident, and the conditions and any caps changed substantially from 6 April 2025 onward as part of the wider reform replacing the old non-domicile regime with a residence-based system. Because the precise qualifying period, any percentage cap and the interaction with the remittance and new foreign-income rules are detailed and date-sensitive, you should confirm the current conditions on gov.uk or with a specialist before relying on the relief; the figures here cover only standard UK tax rates, not the OWR limits themselves. Worked example: a worker who moves to the UK and spends 40% of their working days abroad could, if they qualify, exclude broadly that proportion of employment earnings from UK tax for the relevant years -- a substantial saving for high earners. Accurate day-by-day records of where you worked, plus correct payroll set-up, are essential. Use the income-tax and take-home-pay calculators to estimate UK tax on the non-relieved (UK-duty) portion of your pay.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.