Domicile concept replaced by a new tax regime based on tax residence
From 6 April 2025, the remittance basis of taxation will be replaced by a new tax regime based on tax residence. The concept of domicile as a relevant connecting factor in the UK tax system will be removed.
For more information read the Tax changes for non-UK domiciled individuals policy paper and technical note Reforming the taxation of non-UK domiciled individuals, published on the day of the Autumn Budget 2024.
Overseas Workday Relief (OWR) is an income tax relief available to UK resident non-UK domiciled employees on employment income paid and kept offshore and related to days spent working abroad as part of their UK employment.
From 6 April 2025, as part of the non-domicile reform, eligibility for OWR will be based on an employee’s residence and not their domicile. Where an employee is eligible for the new Foreign Income and Gains (FIG) regime in a tax year, they can make an OWR election which will allow them to make a claim for relief. OWR will continue to apply to certain types of employment income, including Employment Related Securities (ERS) income.
From 6 April 2025, for all ERS and ERS options, the calculation of Foreign Securities Income will be modified for any part of the relevant period that falls after this date, regardless of the date the security or option was granted.
Where the income is apportioned to a tax year in which an employee is eligible for new OWR, ‘a qualifying year’, this income will no longer be treated as Foreign Securities Income and instead will be treated as ‘Securities Income’. The employee may then be able to obtain relief on this income, which relates to duties performed outside the UK in a qualifying year, separately through OWR.
The calculation of Foreign Securities Income for any part of the relevant period before 6 April 2025 is unchanged, with the remittance basis rules continuing to apply.
The non-tax advantaged share scheme ‘Other’ return contains questions on each tab which references apportionment for residence or duties outside of the UK. The questions on the return template will not change but the guidance note for these questions will be updated for 6 April 2025.
New ERS guidance relating to OWR changes has been published by HMRC in the following manuals:
Existing ERS guidance has also been amended to reflect OWR changes:
More information
Read wider guidance on globally mobile employees (GMEs)
Overseas Workday Relief contains useful Employment Income Manuals
GMEs and PAYE contains useful PAYE manuals.
