Overseas Workdays Are Now Tax Data
Updated: Sep 23
What the latest HMRC updates to Overseas Workday Relief mean for internationally mobile employees and UK–Japan assignments
HMRC updated several key Overseas Workday Relief (OWR) manual pages on 11 September 2026, including guidance on eligibility, the financial limit, transitional provisions and trailing income.
The new OWR regime itself is not new. It has applied since 6 April 2025, alongside the new residence-based Foreign Income and Gains regime.
But the latest HMRC guidance makes one practical point increasingly clear:
Under the new OWR regime, managing where money is held matters less. Managing where work is actually performed matters much more.
For internationally mobile employees, especially those moving between Japan and the UK, that turns workday data into tax data.
What Changed Under the New OWR Regime?
Before 6 April 2025, OWR was closely connected to the remittance basis.
Broadly, qualifying foreign employment income could benefit from relief where the relevant income was kept offshore.
From 6 April 2025, the old remittance-basis system was replaced by a residence-based regime. OWR is now available, subject to the detailed conditions, to employees who are qualifying new residents and perform employment duties outside the UK.
A qualifying new resident is broadly someone who is UK resident for the relevant year and was non-UK resident throughout the previous 10 tax years. Qualifying status can potentially continue for up to four UK-resident tax years.
One major practical change is that qualifying income no longer needs to remain offshore.
HMRC confirms that OWR can apply whether qualifying employment income is received into a UK or overseas bank account, and offshore income can be remitted to the UK without that remittance itself creating a tax charge under the new regime. That is a significant simplification. But the complexity has not disappeared. It has moved.
The Key Shift: From Remittance Management to Workday Management
Under OWR, relief applies to qualifying employment income relating to duties performed outside the UK.
That makes the location and timing of employment duties central to the tax outcome.
For a Japanese executive based in London, that may involve:
days working in London;
working trips back to Tokyo;
business travel elsewhere in Europe or Asia;
remote-working days;
bonuses;
deferred compensation; and
share-related remuneration.
The question is not simply:
“How many days were they in the UK?”
It is:
“Where were the employment duties actually performed, and what remuneration relates to those duties?”
That makes travel diaries, calendars and workday records part of the evidence supporting the tax position. In other words:
Travel data is now tax data.
The Financial Limit Matters
For the new regime, OWR is generally subject to an annual financial limit. The maximum relief attributable to a qualifying year is broadly the lower of:
30% of relevant qualifying employment income, or
£300,000.
This matters particularly for higher-paid executives. If 40% of someone’s duties are performed overseas, it does not automatically follow that 40% of their employment income will qualify for relief. The workday allocation and financial limit both need to be considered.
FIG Eligibility and OWR Are Related — But Not the Same Thing
HMRC’s updated guidance confirms an important distinction.
An employee needs to be eligible for the four-year FIG regime to qualify for the new OWR regime, subject to transitional provisions. But they do not need to make an actual FIG claim on foreign income or gains in order to be eligible for OWR. That means the planning questions are separate.
An employee might:
be eligible for FIG;
decide not to claim FIG relief on certain foreign income or gains;
but still make an OWR election for qualifying employment income.
So “Are you using FIG?” is not enough to determine the employment-tax position.
OWR Is an Election, Not an Automatic Relief
OWR does not apply automatically.
For a qualifying year, the employee must first make an OWR election through Self Assessment, and then claim relief on qualifying employment income.
There is also a cost to that election.
HMRC confirms that making an OWR election for a year results in the loss of the:
Personal Allowance, and
Capital Gains Tax Annual Exempt Amount
for that tax year.
therefore
Being eligible for OWR does not automatically mean electing for OWR is economically beneficial.
The tax saved should be compared with the allowances and reliefs lost. That analysis may differ from year to year.
Bonuses and Deferred Remuneration Need Particular Care
One of the most practically useful parts of HMRC’s 11 September update concerns trailing income.
Employment income can be received in one tax year but relate to duties performed in an earlier one. That is particularly relevant to:
bonuses;
deferred compensation; and
certain share-related remuneration.
HMRC states that the OWR treatment broadly depends on the tax year in which the employment income was earned, or to which it relates, rather than simply the year in which it becomes taxable. This is especially important around the 6 April 2025 transition.
Income received after that date but relating to earlier duties may remain subject to the pre-6 April 2025 OWR and remittance-basis rules where the relevant conditions are met.
So payment date alone is not enough.
Employees Who Arrived in 2023–24 or 2024–25 Deserve a Separate Review
The transitional rules are particularly important for people who became UK resident in 2023–24 or 2024–25.
HMRC’s updated guidance confirms that some employees who qualified for OWR under the old regime can continue to benefit from OWR under the new regime.
Where they are also qualifying new residents, eligibility can potentially extend to the first four years of UK residence.
In some transitional cases, the normal 30% / £300,000 financial limit does not apply.
For Japanese employees who arrived in the UK in those years, this is worth revisiting rather than assuming the original assignment tax analysis still tells the whole story.
MHK FALKOR Commentary & Insight
The most interesting aspect of the new OWR regime is not purely technical.
It is organisational. The information needed to support an OWR claim is usually spread across several places.
Information | Typical owner |
Assignment dates | HR |
UK and overseas workdays | Employee / travel system |
Salary and bonus | Payroll |
Share awards | HR / Group Reward |
Assignment cost | Finance |
PAYE treatment | UK Payroll |
OWR election and tax return | Employee / tax adviser |
Do HR, payroll, finance, the employee and the tax adviser all have the same workday story?
If not, the tax risk may arise before anyone starts calculating tax.
This is where OWR becomes more than a personal tax matter.
It becomes a data-governance and operating-process issue.
UK–Japan Perspective
Japanese assignments into the UK often involve several systems and organisations:
Japan HR → Japan Payroll → UK HR → UK Payroll → Finance → Employee → Tax Adviser
Each may hold part of the evidence.
For example:
Japan travel records may show overseas workdays that never reach UK payroll;
a UK bonus may be processed using the current year’s workday pattern even though the award relates partly to an earlier period;
the employee’s calendar may differ from the travel data used by the adviser.
These are not necessarily tax-knowledge failures.
They are often data ownership and reconciliation failures.
That distinction matters because better technical advice alone will not solve them.
C.P.A. and OWR
Clarity
Define:
who is OWR-eligible;
which employment income may qualify;
what constitutes a UK or overseas workday; and
which transitional rules apply.
Precision
Reconcile:
travel records;
payroll;
assignment terms;
bonus periods;
share awards; and
Self Assessment.
Accountability
Decide who resolves discrepancies when the data does not agree.
Clarity defines the rule. Precision establishes the evidence. Accountability resolves the exception.
Board / Finance Question of the Week
For employees claiming Overseas Workday Relief, do our travel data, payroll records, assignment terms and tax returns all support the same workday story?
Practical Action
Take one internationally mobile employee and trace:
Residence → OWR eligibility → Election → Workdays → Salary / Bonus → Financial Limit → PAYE → Tax Return
Give particular priority to:
employees who arrived in 2023–24 or 2024–25;
executives with significant overseas working days;
employees receiving bonuses or share awards; and
cases where UK and Japanese payroll systems both hold relevant data.
If the facts do not reconcile, the first step is not another tax calculation.
It is to fix the information chain.
Concluding Insight
The new OWR regime has reduced the importance of where employment income is held, but increased the importance of knowing exactly where the work was done. The quality of the tax relief now depends heavily on the quality of the underlying workday data.
MHK FALKOR uses C.P.A. — Clarity, Precision and Accountability to connect UK–Japan tax, payroll, finance and governance, turning technical tax rules into processes that work in practice.
Sources & Further Reading
HMRC — Overseas Workday Relief — updated 6 April 2026. This is the principal public guidance covering the post-2025 regime, elections, remittance treatment and transitional provisions. Read HMRC Overseas Workday Relief guidance
HMRC — EIM43560: Overseas Workday Relief — eligibility — updated 11 September 2026. Particularly relevant to the link between qualifying-new-resident status and OWR. Read HMRC OWR eligibility guidance
HMRC — EIM43600: Overseas Workday Relief — financial limit — updated 11 September 2026. Explains the 30% / £300,000 annual limit. Read HMRC financial-limit guidance
HMRC — EIM43605: Overseas Workday Relief — transitional provisions — updated 11 September 2026. Particularly important for employees arriving in 2023–24 and 2024–25. Read HMRC transitional guidance
HMRC — EIM43610: Overseas Workday Relief — trailing income — updated 11 September 2026. Relevant to bonuses and other remuneration relating to earlier periods. Read HMRC trailing-income guidance
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