The recent UK Budget has introduced reforms to Overseas Workday Relief (OWR), a long‑standing provision designed to support internationally mobile employees.
Overseas Workday Relief is a UK tax concession that allows qualifying new residents to exclude income attributable to non‑UK workdays from UK taxation, subject to certain thresholds. The changes aim to align PAYE processes with statutory limits and prevent over‑claims of relief through payroll. Please see below an update regarding the key changes:
- Effective date: From 6 April 2026
- Relief cap: OWR will be restricted to the lower of £300,000 or 30% of total employment income for the year for qualifying new UK tax residents
- PAYE alignment: If an employee qualifies for OWR, employers can apply to HMRC via a s690 application to reduce PAYE withholding. Under the new rules, employers must ensure that relief claimed does not exceed the above highlighted thresholds
- Transitional rules: Individuals who claimed the remittance basis under the pre‑6 April 2025 regime and remain within their first four years of UK residence are not subject to the cap. It remains unclear how the new measure will affect them
How Abbiss Cadres Can Help
Abbiss Cadres can provide expert guidance by:
- Advising employers on payroll processes and s690 applications to ensure compliance with the thresholds.
- Supporting internationally mobile employees in understanding how the new OWR limits affect their tax position.
- Navigating transitional rules for those previously claiming the remittance basis.
- Offering integrated tax, legal, and HR support to manage cross‑border employment arrangements effectively.