Budget 2015: Review of the rules around Overseas Workday Relief

Review of the rules around Overseas Workday Relief

2015 UK Budget – KPMG commentary and analysis


Tax Partner - Head of EU Tax Group

KPMG in the UK


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Parliament and Big Ben

A consultation is currently in progress on the possibility of introducing a minimum claim period for the remittance basis charge. We believe it is unfortunate that the Government did not take this opportunity to consult more widely on issues around the remittance basis.

We believe that early in the next Parliament, the Government should consult more generally on the current remittance basis rules, with the aim of identifying areas which are unnecessarily complicated in practice or which fail to meet their underlying policy objective.

One example where we believe reform of the current rules is required is around the operation of Overseas Workday Relief (OWR). OWR allows qualifying individuals with earnings from both UK and non-UK duties to be subject to UK tax on their earnings for non-UK duties only to the extent that they are remitted to the UK. OWR is used by many expatriate employers and employees and is a valuable relief in the context of an increasingly mobile global workforce.

As currently drafted, the rules around nominated bank accounts are complex and produce impractical results. The conditions for making a nomination can be met not only before the employee comes to the UK but even before they have any intention of coming to the UK. This can mean that when the employee comes to the UK they have missed the qualifying date for the nomination of the account. There does not appear to be any sensible rationale for this: we believe this is just an unforeseen consequence of the drafting.

To benefit from the relief, the employee has to keep funds outside the UK and not benefit the UK economy. When funds are remitted and a nomination cannot or is not made, the strict mixed fund rules make the calculation of remittances particularly onerous. This does not support the Government’s stated aim that the UK is open for business.

Now that the Government has tightened up the conditions for qualifying for this relief and limited it to the year of arrival and the next two years, we believe it would be beneficial to replace the current rules with a standard relief for qualifying earnings which does not rely on the actual remittance or non-remittance of money to the UK. This would both simplify UK tax requirements for expatriate employees, making the UK a more attractive destination and allow more money to be used in the UK for the benefit of the UK economy.


This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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