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Where an employee became UK resident in either 2023-24 or 2024-25, qualified for OWR, and elected to be taxed on the remittance basis for at least one of these tax years, if they are not a qualifying new resident in 2025-26, they will still be eligible for OWR for their first three years of UK residence.Ìý

Where an employee became UK resident in either 2023-24 or 2024-25, qualified for OWR, and elected to be taxed on the remittance basis for at least one of these tax years, if they are a qualifying new resident in 2025-26, they will be eligible for OWR for their first four years of UK residence.

For these employees OWR for any tax year commencing on or after 6 April 2025 will be available under the new OWR regime, rather than the remittance basis. This means these employees will have to make an OWR election for any tax years commencing on or after 6 April 2025, as well as make an OWR claim for relief. The relief available for these employees in relation to any tax year commencing on or after 6 April 2025 and ending prior to 6 April 2028, will not be subject to the financial limit.

Example 1

Camille became UK resident in 2023-24. She was non-UK domiciled and eligible for OWR in that tax year as she met the requirements at section 26A ITEPA 2003 and elected to be taxed on the remittance basis for 2023-24. Camille is UK resident for 2024-25 and 2025-26, but is not a qualifying new resident for 2025-26.Ìý As Camille became UK resident in 2023-24, met the requirement of section 26A ITEPA 2003 and elected to be taxed on the remittance basis in that tax year, Camille is treated as being a qualifying new resident for the purposes of Chapter 5C of Part 2 ITEPA 2003 for 2025-26. Camille can make an OWR election for that tax year, and if she then makes an OWR claim for relief, she will not be subject to the financial limit on her qualifying foreign employment income for 2025-26.

Where an employee became UK resident in 2022-23, qualified for OWR and elected to be taxed on the remittance basis for at least one tax year commencing on or after 6 April 2022 but ending prior to 6 April 2025, they will not be eligible for OWR for 2025-26, even if they are a qualifying new resident for that tax year.

Example 2

Julien became UK resident for the first time in 2022-23. He was non-UK domiciled and eligible for OWR in that tax year as he met the requirements at section 26A ITEPA 2003 and elected to be taxed on the remittance basis in 2022-23. Julien is UK resident for 2023-24, 2024-25 and 2025-26, and is a qualifying new resident for 2025-26.Ìý As Julien became UK resident in 2022-23, met the requirement of section 26A ITEPA 2003 and elected to be taxed on the remittance basis in that tax year, Julien is treated as not being a qualifying new resident for the purposes of Chapter 5C of Part 2 ITEPA 2003 for 2025-26. As a result, Julien can make a claim for relief under the 4-year FIG regime for 2025-26, but is not eligible to make an OWR election for that tax year.Ìý

As set out previously in this guidance, an employee can be taxable on employment income in a different tax year to the one in which it was earned. Where employment income relating to employment duties performed prior to 6 April 2025 is received after 6 April 2025, if it relates to duties performed in a year for which the employee elected to be taxed on the remittance basis, the remittance basis rules will continue to apply to this income.Ìý

Where this income is received after 5 April 2025, but before 6 April 2028, you may be able to include in a designation under the Temporary Repatriation Facility (‘TRF�). For more information about the TRF please see RDRM71000.

Example 3

Gregoire became UK resident for the first time in 2024-25. He was non-UK domiciled and eligible for OWR in that tax year as he met the requirements at section 26A ITEPA 2003 and elected to be taxed on the remittance basis for 2024-45. Gregoire remains UK resident for 2025-26 and is a qualifying new resident for that tax year.

Gregoire earns £120,000 salary in each tax year and receives an annual bonus of £50,000 in each tax year, which relates to duties performed during the previous tax year.

In 2024-25 Gregoire is subject to the remittance basis, and £90,000 of his earnings received in that year are taxable on receipt, while the remaining £30,000 are taxable on remittance. He has his earnings paid offshore and leaves £30,000 (25% of £120,000) unremitted. The £50,000 bonus received in 2024-25 relates to a year in which Gregoire was non-resident in the UK and none of it relates to duties performed in the UK. As such it is not chargeable to UK income tax, whether it is remitted to the UK or not.

In 2025-26, Gregoire is a qualifying new resident and makes an OWR election for that tax year. Gregoire has qualifying foreign employment income of £30,000 in respect of his net taxable income for that tax year of £120,000. The £50,000 bonus received in 2025-26 is for 2024-25 so that it is subject to the remittance basis. £12,500 of the bonus is taxable on remittance, so that Gregoire can include this in a designation under the TRF as it was received prior to 6 April 2028. If the bonus is not paid overseas and is not included in a designation, then it will be taxable in 2025-26 when it was received in the UK.