Overseas workday relief
Overseas workday relief can reduce your UK tax liability in certain circumstances where you work overseas.
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Overview
Overseas workday relief can mean that earnings relating to duties performed outside the UK are excluded from UK tax.
The overseas workday relief regime changed fundamentally on 6 April 2025 in line with the new foreign income and gains regime.
There are some important differences between both regimes, for example:
| Relief for overseas workdays performed up to 5 April 2025 | Relief for overseas workdays performed on or after 6 April 2025 |
| You must be non-domiciled and taxed on the remittance basis for the year in which the duties are performed. You must also be non-resident for three consecutive tax years immediately before becoming resident in the UK. | You must be a qualifying new resident for the year in which the duties are performed (or deemed to be under transitional provisions) and make a foreign employment election for that year. |
| The earnings for the overseas duties must be paid and retained offshore | The earnings for the overseas duties carried out from 6 April 2025 can be paid in the UK or remitted to the UK |
| Relief is available without any cap | The relief is capped at the lower of 30% of relevant qualifying employment income or £300,000 per tax year (unless the cap is disapplied under transitional arrangements). HMRC have further guidance on GOV.UK |
| Relief is only available for a maximum of three years | Relief is available for a maximum of four years |
Further conditions – pre-April 2025 regime
This relief for overseas duties performed up to 5 April 2025 is available for taxpayers who claim the remittance basis of taxation in the year the duties are performed and where the earnings relating to their overseas workdays are paid and retained overseas. Such earnings are then taxable in the UK only to the extent they are remitted to the UK – even if that is after 5 April 2025. If you wish to remit such income to the UK after 5 April 2025, it is possible to pay a special low rate of tax if the income is designated under the Temporary Repatriation Facility.
There are specific conditions that must be met in order for the relief to apply and we would strongly advise you to read HMRC’s guidance if you wish to claim this relief and seek professional advice.
In particular, you should be aware that the rules regarding what is deemed to be remitted to the UK from a bank account containing more than one type of income are complex. There are simplified rules available if you set up a qualifying account in advance of receiving your first salary payment.
Transitional rules
If you arrived in the UK prior to 6 April 2025 and you were eligible for overseas workday relief for a tax year prior to 2025/26, then under transitional provisions you may be treated as a qualifying new resident under the new regime from 2025/26 onwards even if you wouldn’t otherwise meet the conditions. In this case, overseas workday relief can continue to be claimed for the first three years of residence. The relief is given under the new regime for duties performed on or after 6 April 2025 (and therefore it is not relevant whether such earnings are remitted to the UK), but the cap is disapplied.
The cap is also disapplied if you qualify for overseas workday relief under both transitional provisions and the new regime. In this situation, relief is available for the first four years of residence.
However, if your first year of residence was 2022/23 and you have already claimed overseas workday relief for the 2022/23, 2023/24 and 2024/25 tax years under the old regime, you cannot claim overseas workday relief for 2025/26 – even if you otherwise meet the conditions to be a qualifying new resident in that year.
You can find further information and examples at GOV.UK.
Making a claim – post-April 2025 regime
In order to claim overseas workday relief for non-UK duties performed on or after 6 April 2025, a foreign employment election must be made in the tax return for the year in which the duties are performed.
For further information about deadlines and the impact of making an election, see the heading Making a claim at Foreign income and gains from 6 April 2025.
Cap on overseas workday relief under post-April 2025 regime
Relief under the new regime is capped to the lesser of:
- 30% of your relevant qualifying employment income in the year the duties are performed (this excludes income from employments carried out wholly in the UK), and
- £300,000
This limit applies for each tax year in which a foreign employment election is made.
Taxpayers who carry out more than 30% of their duties overseas will therefore have the relief restricted.
Note that if income for overseas duties is not received until a subsequent tax year, then although the income is taxed in the year of receipt,
- the availability of overseas workday relief on that income depends on whether a foreign employment election was made in the year in which the duties were performed, and
- the cap applies by reference to the total amount of relief claimed for duties performed in the year (even if some of that income is received in a later tax year).
More information
Overseas workday relief can be very complex. If you are considering making a claim, then we strongly recommend you seek professional advice.
See also the guidance on GOV.UK.
