Overseas Workday Relief and Detached Duty Relief

Overseas Workday Relief

If you’ve recently moved to the UK and some of your work duties are carried out outside the UK, you may be able to exclude part of your employment income from UK tax. This relief is called Overseas Workday Relief (OWR). 

The rules changed on 6 April 2025, as part of a wider reform of how the UK taxes people who are not permanently settled here (previously known as the “non-domicile” regime). Under the old system, the availability of OWR depended on your domicile status (if your “true/permanent home” was the UK or not) and required you to pay the relevant earnings to an offshore bank account as part of the complex remittance basis rules. Under the new system, OWR instead depends on your UK tax residence history regardless of your domicile, and as the remittance rules do not apply to the new system, the relevant earnings can be paid to a bank account anywhere in the world, including the UK. 

Who qualifies from 6 April 2025 

To qualify for OWR under the new rules, you will generally need to meet all of the following: 

• You are UK tax resident in the relevant tax year as per the UK Statutory Residence Test. 
• You are a “qualifying new resident” for the tax year (or you’re treated as one under the transitional rules explained below). This is a specific status created by the new Foreign Income & Gains (FIG) regime. It applies to taxpayers who have resided in the UK for no part of the last four UK tax years and who had a period of non-residence for at least ten years prior to arrival. HMRC’s page here sets out eligibility criteria and examples.  
• The employment income relates, on a fair and reasonable basis, to work duties carried out outside the UK during a qualifying year. 

The financial cap 

For work duties carried out on or after 6 April 2025, you no longer need to pay the relevant income into (or keep the relevant funds in) a foreign (non-UK) bank account to benefit from OWR. This was a strict requirement under the old rules that limited those who could benefit from this relief. This restriction has been removed. 

The relief is now however subject to a cap. The amount you can relieve from UK tax is limited to whichever is lower of: 

• 30% of the qualifying employment income, or
• £300,000 for the tax year,

This cap applies from 6 April 2025 unless a transitional exemption from the cap applies (see below). 

How long you can claim 

OWR can generally be claimed for up to four UK tax years, starting with your first tax year of UK residence. This is on the basis that you meet the relevant “qualifying new resident” requirements as per the FIG regime. 

The relief can apply to a range of employment income, including: 

• salary and earnings,
• certain employee benefits,
• employment-related securities (e. RSUs, stocks and options), and 
• other amounts that are treated as employment income for tax purposes,

to the extent these forms of compensation relate to overseas work duties performed in a qualifying year. 

Transitional rules for people who arrived before April 2025 

Different rules can apply if you became UK resident before 6 April 2025. These are transitional rules for those that qualified under the old OWR rules but do not necessarily qualify for the new OWR rules. You qualify for the transitional rules if you: 

• first became UK resident in the 2023/24 or 2024/25 tax year,
• qualified for OWR under the old rules, and
• claimed the remittance basis for at least one relevant year (2023/24 or 2024/25), 

If these criteria are met then you may continue to access OWR under the new regime for the remainder of your original OWR period irrespective of whether you qualify for the new OWR rules. 

From the 2025/26 tax year onwards, you’ll need to make an OWR election and claim under the new rules described above. However, the £300,000 / 30% cap may not apply for certain transitional years ending before 6 April 2028. 

Bonuses, share awards and deferred income 

OWR can also apply to bonuses, share awards and other employment-related securities. However, these forms of compensation can be more complex, because relief depends on: 

• when the work duties were actually performed, 
• the period the income relates to, and
• the tax year in which the income is actually taxed.

If your income is deferred – i.e. it relates partly or wholly to employment duties performed in prior tax years but is paid after you arrive in the UK or linked to share or equity incentives, we recommend taking specialist advice, as the timing rules can significantly affect how much relief is available. 

Detached Duty Relief

If you have moved to the UK as part of an assignment by a foreign employer, then you may be able to claim relief on your housing, travel and subsistence expenses related to your time in the UK under rules concerning a “temporary workplace” (also known as Detached Duty Relief or DDR). To qualify for the relief you must not be considered to have started a new job in the UK and the expectation must be that the assignment or secondment to the UK will not exceed 24 months. If at any point in the 24 month period the intention becomes to stay for longer than 24 months, the relief is withdrawn from that point.

The claimable expenses are limited to those relating to the employee only, not costs for the whole family, and those costs need to be “reasonable”.

For more information see HMRC page: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim77010