By Ogonna Agwa
13 Apr 2026
Overseas Workday Relief (OWR) is a tax relief for employees who are tax resident in the UK but perform part of their duties abroad. It allows income related to days worked outside the UK to be tax-free, subject to certain conditions being met.
OWR has been around a very long time; however, with recent changes to the rules in April 2025, has this change brought more winners or losers?
The major shift towards a residency-based tax regime following the abolition of the non-domicile regime on 6 April 2025, has made a significant impact on how UK residents and internationally mobile taxpayers are taxed in the UK.
One lesser used relief under the old remittance basis rules has been modified and adapted for a new age. Under the new and old rules, certain employees can claim tax relief on the income relating to their overseas workdays. But, what are the differences and who is eligible?
Under the old OWR regime, individuals needed to be non-domiciled and taxed on the remittance basis to claim relief, meaning this relief was not available to any UK domiciled employees. Furthermore, the claim whilst uncapped in terms of relief claimed, was only available for the first three tax years of residence, provided that the individual was not resident in the UK in any of the three prior tax years before moving to the UK.
A key requirement was that earnings needed to be paid into an offshore bank account and, crucially, the earnings attributable to those overseas workdays were kept outside the UK. The moment those funds were brought into the UK—whether directly or indirectly—they became taxable. This created what advisers often referred to as the ‘remittance trap’: income that was initially tax-free could become taxable months or even years later if it found its way back to the UK.
There were other trade-offs too. Claiming the remittance basis meant giving up the personal allowance and Capital Gains Tax annual exemption.
As part of the changes which are aimed at attracting overseas talent, from 6 April 2025 these OWR conditions have been replaced with more favorable terms, which include being assessed based on residency status and can be used in conjunction with the Foreign Income and Gains (FIG) regime. If you need a primer on the FIG regime, see our article here.
The new OWR regime is designed for newly UK-resident individuals (i.e those not resident in the UK in any of the 10 tax years prior to moving to the UK), who perform part of their employment duties overseas, allowing relief from UK tax on the portion of overseas employment income that relates to duties performed overseas.
The new changes do cap the relief claimable, as OWR can only be claimed in respect of amounts of the lower of £300,000 or 30% of qualified earnings, the Personal Allowance is again restricted here if a claim is made.
However, the relief is now available for up to four tax years, compared with the previous three years, resulting in an extra year of potential tax savings for new residents. Even more importantly, there is no requirement for earnings to be paid or retained offshore.
Without OWR, individuals may be subject to UK tax on earnings earned from overseas workdays and in some cases, this can increase the risk of double taxation, leading to more complex tax filings in both the UK and the other jurisdiction. By making a claim for OWR it can provide tax relief on qualifying overseas earnings, helping to keep the position simpler and more straightforward, which is important in an ever increasingly complicated and interconnected global tax climate.
If you think OWR may be relevant for you or your employees, our expert team of International Tax advisers are here to help, please get in touch.
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