Last updated: 16 October 2026
What changed for globally mobile employees?
Before April 2025, employers could apply to HMRC for a “section 690 direction” to run PAYE on only part of a non-domiciled employee’s pay, where some duties were performed overseas. When the non-dom regime was abolished on 6 April 2025, those directions stopped. Directions issued before 6 April 2025 are no longer valid. The new system is based on tax residence instead of domicile.
Overseas Workday Relief under the new rules
Overseas Workday Relief (OWR) now applies to employees who qualify for the new four-year foreign income and gains regime, meaning they were not UK resident in the previous ten tax years. For each of their first four years of UK residence, earnings for duties performed outside the UK can be exempt, whether or not the money is brought to the UK. The relief is capped at the lower of £300,000 or 30% of the employee’s employment income for the year.
How PAYE works now
| Situation | PAYE treatment |
| Employee qualifies for OWR and works partly abroad | Employer can notify HMRC and operate PAYE on a reduced proportion of pay |
| UK resident without OWR | PAYE on all earnings |
| Non-resident working partly in the UK | PAYE on the UK duties portion, subject to treaty relief |
| Short-term business visitor from a treaty country | Special arrangements may allow no PAYE for short visits |
What employers need to do
- Identify employees who arrived from abroad and may qualify for the four-year regime.
2. Estimate the split of UK and overseas workdays at the start of the tax year.
3. Send HMRC the required notification to operate PAYE on a reduced amount. A new notification is needed even if a section 690 direction was in place before.
4. Track actual workdays and travel during the year.
5. Correct any differences through the employee’s Self Assessment return.
Example
Elena moved to London from Spain in July 2025 and had not been UK resident for ten years. In 2026/27 she earns £150,000 and spends 35% of her working days outside the UK. OWR could cover 30% of her earnings (£45,000), because the 30% cap is lower than the overseas share. Her employer notifies HMRC and runs PAYE on the remaining 70%. Elena claims the relief on her tax return.
Employer National Insurance
NIC follows different rules from income tax. Social security agreements and the UK-EU Trade and Cooperation Agreement decide which country’s contributions apply. Employees on a temporary posting may stay in their home country’s system with a certificate. Otherwise, employer NIC is 15% on earnings above £5,000 in 2026/27.
Why it matters
Getting PAYE wrong can mean the employer owes tax that should have been deducted, plus interest at 7.75% a year and possible penalties. It also affects tax equalisation costs for employers who promise employees they will pay no more tax than at home.
Frequently asked questions
Does OWR still require the earnings to stay offshore?
No. Under the new rules the money can be brought to the UK.
What happens after four years?
The employee is taxed on worldwide earnings, including overseas duties.
Do employees need to claim OWR?
Yes, through Self Assessment, even if the employer used a reduced PAYE notification.
Does the new regime apply to existing employees?
It applies to anyone in their first four years of UK residence after ten years abroad, including those who arrived before April 2025.
Related: non-dom changes, working abroad and your tax return and how 2025 changes affect your status.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with PAYE for internationally mobile employees. See our payroll services service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
