Overseas Workdays Relief (OWDR) is a valuable tax relief available to non-UK domiciled taxpayers, which exempts employment earnings relating to duties performed overseas from a charge to UK tax provided certain conditions are met.
If implemented correctly and in the right circumstances the relief can generate very big UK tax repayments.
To be eligible for this relief, an individual is required to:
• Be UK tax resident in the tax year following three consecutive tax years of non-UK tax residence;
• be domiciled outside the UK;
• claim the remittance basis of taxation;
• have a UK employer;
• perform their employment duties wholly or partially abroad;
• retain a proportion of employment income relating to non-UK duties in a non-UK bank account; and
• keep accurate records to support their claim.
This relief is only available for the first three years of UK tax residency so planning should be considered as soon as possible to avoid missing out on it, including arranging for a non-UK bank account to be set-up to receive a relevant proportion of your salary.
It will be available in the year of arrival or departure where split-year rules apply. However, it applies only to that part of the tax year where you are UK tax resident.
This relief does not apply to foreign employments. Special rules apply where individuals working for a non-UK employer perform duties outside the UK.
OWDR will need to be claimed annually in a Self Assessment tax return and the resultant tax repayments will be made following the filing of this with HMRC. However, it is possible for an election to be filed with HMRC in advance of this so that tax relief can be received at source from your monthly salary.
You will need to keep sufficient evidence to support your overseas travel, together with your non-UK bank statements.
It is not possible to make a claim for OWDR using HMRC’s tax filing software and you will need to use a professional to prepare and file your tax return.
We are very experienced in this field and our expertise in the reliefs available to non-doms will ensure our clients can optimise their UK tax position. If you would like to discuss your eligibility to claim overseas workdays relief, please contact me or another member of our team.