EIM43610 - Globally mobile employees: Overseas Workday Relief: trailing income which relates to a pre-6 April 2025 tax year
Source: gov.uk (2025-09-25)


As set out previously in this chapter, the treatment of employment income broadly depends on the tax year in which it was earned, or to which it relates, rather than the tax year in which it becomes taxable. This means that employees may receive ‘trailing income’ in a tax year, which is employment income taxable in that year, but which relates to employment duties performed in a previous tax year.

Where trailing income relates to the period before 6 April 2025 but is received afterwards, if it relates to a tax year in which the employee had elected to be taxed on the remittance basis and qualified for OWR by meeting the conditions at s26A, it will continue to be subject to the pre-6 April 2025 OWR rules. This means that to the extent it relates to duties performed outside the UK, it will continue to be taxable upon remittance.

Note also that this treatment also applies to qualifying foreign income and gains for the purposes of the Foreign Income and Gains (FIG) regime. When an individual makes a claim for their foreign income and gains for a tax year, they are only entitled to relief in respect of the income and gains for that tax year which arise on or after 6 April 2025 (as no such claim could have been made before). This means that former remittance basis users who are eligible for the FIG regime cannot claim relief for any foreign income and gains that accrued prior to 6 April 2025 when they were UK resident and using the remittance basis. Further information about the FIG regime can be found at RFIG45100 (https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig45100).

Example

Emily arrived in the UK on 6 April 2024 and met the conditions at section 26A for 2024-25 having never been in the UK before. From 6 April 2025, Emily also meets the conditions as a qualifying new resident and is eligible to make an election and claim OWR for a further three tax years.

In 2025-26, Emily receives £250,000 earnings from a single employment. This consists of £180,000 in respect of duties performed in 2025-26 and £70,000 in respect of duties performed in 2024-25.
- In 2024-25, Emily performs 60% of her duties in the UK and 40% of her duties overseas.
- In 2025-26 Emily performs 70% of her duties in the UK and 30% of her duties overseas.
The amount of employment income received in 2025-26 that is qualifying foreign general earnings for duties performed in the qualifying year is £54,000 (30% of £180,000). This amount is not subject to the financial limit as Emily became UK resident in 2024-25 and meets the requirements for the transitional provisions to apply (see EIM43605 (https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim43605)).

The amount of employment income received in 2025-26 in respect of duties performed in 2024-25 that is foreign earnings as set out in section 26 ITEPA 2003 is £28,000 (40% of £70,000). For this amount to benefit from OWR this amount will need to be paid and kept offshore. The amount of £28,000 can benefit from OWR if it has been kept offshore.

For income that qualified for OWR under the old rules in years prior to 2025-26 and was paid offshore and left unremitted during that tax year, the Temporary Repatriation Facility (TRF) is available to bring that income to the UK at a lower rate. This also applies to former remittance basis users who return to the UK after 10 consecutive tax years of non-UK residence and are eligible for the FIG regime. Relief cannot be claimed for any foreign income and gains that accrued prior to 6 April 2025 when they were UK resident and using the remittance basis, but individuals may want to use the TRF to remit their foreign income and gains from those prior years at a lower tax rate. See RDRM71000 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm71000).