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Overseas Workday Relief & Detached Duty Relief


Overseas Workday Relief

If you have moved to the UK recently but perform some of your work outside the UK, then you may be able to exclude the earnings relating to those foreign duties from UK tax by claiming Overseas Workday Relief (OWR).
 
To qualify for OWR you must satisfy the following requirements:

  • You were not domiciled in the UK throughout the year;
  • You are taxed on the remittance basis for that year; and
  • Your duties of employment are carried out wholly or partly outside the UK, and that year is either:
    • The first tax year immediately after 3 consecutive tax years that you were not resident in the UK, or
    • One of the next 2 tax years after such a year.
 
The foreign earnings must not be remitted to the UK, which means that it is important that you receive this income into to a foreign (non-UK) bank account (for example in the Channel Islands).
 
Please see our separate pages for more information on domicile and the remittance basis.
 
The OWR rules also apply to bonuses and stock-based compensation. Note that claiming OWR in connection with share awards will affect the treatment of the sale of the shares if they are subject to UK tax in a later year. 
 
For more information see HMRC page: https://www.gov.uk/government/publications/rdr4-overseas-workday-relief-owr/overseas-workday-relief-rdr4

​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 If at any point in the 24 month period the intention becomes to stay for longer than 24 months, the relief is withdrawn from that point.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


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Jaffe & Co and American Tax International are trading names of Jaffe & Co LLP, company number OC383176
UK tax services are provided by Jaffe UK Services Ltd, company number 11588450
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein. 

Information provided on this website is for guidance purposes only and should not be construed or relied upon as formal tax, legal or financial advice.
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