Posted by Nick Day on 16 Mar 2016
Overseas Workday Relief (OWR)
OWR for non-UK Business Travel
UK domiciled individuals have to file their UK tax returns on the “arising basis,” reporting worldwide income and gains. However, the remittance basis is available to UK residents that are non-UK domiciled (often called “non-doms”) which means that UK tax is paid on foreign and overseas income or gain but only if remitted (brought) to the UK.
Providing that the correct planning steps are taken, non-domiciled overseas individuals filing their UK tax returns on the remittance basis can actually legally avoid paying UK tax by claiming Overseas Workday Relief. They can avoid tax on employment earnings relating to non-UK workdays for the year that they arrive in the UK, after first becoming UK tax residents, and for at least the next two tax years.
So, for example, if your job, after relocating to the UK, results in you travelling on overseas (non-UK) business for 40% of the time, you, potentially, are taxable in the UK on just 60% of your earnings. Nevertheless, you will generally lose your Personal Allowance – being £10,600 for the 2015/16 year – if you do indeed claim Overseas Workday Relief.
Ideally, a “compliant” offshore bank account should be opened to receive your employment earnings. This helps to circumvent the complex UK tax rules which apply when remittances are made to the UK from offshore or overseas “mixed funds”.
UK Self Assessment Tax Return
Overseas Workday Relief is claimed via your UK Self Assessment Tax Return. If you are to take advantage of Overseas Workday Relief it is imperative that you keep accurate business travel records and keep all evidence of your foreign travel, such as flight tickets, in case of HMRC enquiries, as they will be required to prove your travel movements.
Contact Tax Innovations about Overseas Work Relief
If you would like any advice regarding expat tax services or OWR or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or firstname.lastname@example.org.
- Property Partnership Incorporation and SDLT
- Companies House and HMRC Scam Alert
- Overseas Pension Changes 6 April 2017
- Changes to the Taxation of QNUPS
- Qualifying Non-UK Pension Schemes (QNUPS)