We recently had some interesting news from the Spring Budget 2024.
The UK Government has introduced some important updates to the Overseas Workday Relief (OWR), marking a significant step forward in how the UK approaches taxation for those not domiciled in the UK.
For those who might not be familiar, OWR has been a bit of a lifeline for individuals from outside the UK working here.
It allowed them to only pay tax on the income earned for the days they worked in the UK (rather than on income earned for the rest of the year as well).
This was particularly handy during the first three years of their tax residency in the UK, serving as a great tool for tax planning for those with professional commitments both here and abroad.
The eligibility for OWR was pretty specific, aimed at helping those working internationally to minimise their UK tax bill.
This was all about making the UK an attractive place for talented professionals from around the world.
But with the recent announcement, we’re moving from the old system – where non-domiciled individuals could choose to pay UK tax on UK income and gains, and on foreign income and gains only if they brought it into the UK – to a new, simpler system based on residency.
This means no more having to keep your overseas income outside the UK to benefit from the relief.
What’s great is that the new approach keeps the spirit of OWR but makes it easier to apply.
It’s about breaking down barriers and allowing eligible individuals to bring their overseas earnings to the UK without worrying about extra taxes.
This change is expected to make tax processes smoother and boost spending and investment within the UK economy.
For businesses, this means it’s time to take another look at how they handle tax and payroll for employees from outside the UK.
It could also impact how attractive UK-based roles are on the global stage, possibly influencing how compensation packages are put together to draw in international talent.
Individuals who’ve benefited from OWR in the past should think about how these updates might impact their financial and tax planning.
Although the new system aims to cut down on paperwork, it also brings new factors to consider, especially for those with considerable income from abroad.
Now’s the ideal time to reassess and adjust your practices to fit in with the new rules.
Embracing the new OWR system
Adapting to these changes offers a chance to fine-tune tax efficiency, especially when planning around workdays abroad and bringing income into the UK.
It’s all about finding the right strategy for your or your business’s unique situation to make the most of the new system.
Given the intricacies of these changes, getting advice from tax experts is more important than ever.
We can help ensure you’re following the new rules correctly while finding the best tax position for you, giving you peace of mind and clear direction during this transition.
If you’re looking for advice on these changes or need some help navigating your current tax responsibilities, our team is here to assist.
Don’t hesitate to get in touch for support and guidance.