Overseas workday relief

Produced by Tolley in association with Paul Tew

The following Employment Tax guidance note Produced by Tolley in association with Paul Tew provides comprehensive and up to date tax information covering:

  • Overseas workday relief
  • Availability of the relief
  • Conditions for relief
  • Remittances of income to the UK and bank account management ― nomination of account
  • Prohibited sums
  • Calculating the amount of the relief
  • Record keeping

Overseas workday relief

A relief from UK taxation for the earnings related to non-UK duties has long been a feature of the UK tax system. The availability of the relief has always been subject to certain conditions. Prior to 6 April 2013 these conditions were primarily that an individual had to be considered to be not ordinarily resident in the UK and that the income for those non-UK workdays had to be paid and retained outside the UK. With the abolition of the concept of ordinary residence from 6 April 2013, new rules for overseas workday relief (OWR) were introduced. The purpose of this note is to provide an overview of those statutory rules for OWR, which were introduced with effect from 6 April 2013.

Strictly, OWR is not a relief and is not claimed. It is merely shorthand for saying that some of the earnings for overseas duties have not suffered taxation because they are assessable on the remittance basis and have not been remitted.

As with the changes to UK residence that also took effect from 6 April 2013, these rules are still untested and it remains to be seen how the rules will be interpreted by HMRC when enquiring into an individual’s tax return.

Availability of the relief

There were a number of fundamental changes to OWR following the abolition of ordinary residence.

Firstly, prior to 6 April 2013 there was no condition regarding domicile status, although there was a requirement for the individual to be not ordinarily resident in the UK. Therefore, both UK and non-UK domiciled individuals could benefit from the relief providing their intention was not to remain in the UK for a period longer than three years.

This changed when Finance Act 2013 amended ITA 2007, s 809B to restrict the remittance basis to individuals who are non-UK domiciled only.

Secondly, prior to 6 April 2013 the relief for income relating to non-UK workdays continued only while the individual remained not ordinarily resident in the

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