Compliance
Complying with PAYE and Overseas Workday Relief Limits in the UK from April 2026
Financially mobile UK employees and employers must prepare for new restrictions on in-year Overseas Workday Relief at PAYE from 6 April 2026, ensuring tax benefits claimed during the year align with those claimed at self-assessment.
By NomadicTax Research Team • 5-8 min read • February 23, 2026
## Background: Overseas Workday Relief & Section 690 Notifications
The UK introduced **Overseas Workday Relief (OWR)** effective **6 April 2025**, allowing qualifying new residents to exclude income from duties performed outside the UK. Employers can also submit a **Section 690 PAYE notification**, providing **in-year provisional relief** resembling the relief claimed later at Self Assessment. ([gov.uk](https://www.gov.uk/government/publications/globally-mobile-employees/overseas-workday-relief?utm_source=openai))
## What Changes from April 2026?
From **6 April 2026**, employers submitting Section 690 notifications must **limit the proportion of income excluded** via PAYE to **no more than 30%** of the employee’s total income. This aligns the in-year relief with what the employee can claim at Self Assessment. ([gov.uk](https://www.gov.uk/government/publications/aligning-paye-and-overseas-workday-relief/aligning-paye-notifications-with-the-overseas-workday-relief-limit?utm_source=openai))
## Who Is Affected?
- **Qualifying new residents** eligible under the FIG rules issued as part of tax reforms in 2025. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Employers** who notify HMRC via Section 690—often multinational employers or those with globally mobile staff.
- **UK employees** who perform work both in the UK and abroad and who often use PAYE notifications to smooth cash flow during the tax year.
## Practical Steps for Employers & Employees
### Employers:
- Review Section 690 notification practices—ensure no provisional exclusion requests exceed **30%**.
- Update payroll policies and train HR/ payroll staff on the revised minimum thresholds.
- Monitor employee earnings carefully—estimates of overseas workdays must be reasonable.
### Employees:
- Track overseas workdays accurately—day-by-day logs help in calculating legitimate OWR claims.
- Coordinate with employer to ensure Section 690 notification stays within the 30% cap if seeking in-year relief.
- File a Self Assessment return correctly—any in-year relief claimed under PAYE must correspond with Self Assessment outcome.
## Typical Scenario
Maria moves from Spain to the UK in April 2025 after 10 full years abroad, becoming a qualifying new resident. She works 60 workdays overseas, 240 in the UK. Her total earnings are £100,000. Under OWR, she could exclude up to 25% overseas work income—but from 6 April 2026, if her employer submits a Section 690, they cannot exclude more than **30%** (so up to £30,000). If used, Maria must reflect this in her year-end return. Over-claims are disallowed.
## Compliance & Risk
- **Over-exclusion** at in-year stage may lead to HMRC disallowing excess relief or even applying penalties.
- Employers failing to limit provisional relief above 30% risk non-compliance and need for refunds or corrections.
- Permanent residence status and tax domicile still influence eligibility—residency tests must be correctly evaluated.
## Actionable Advice
1. Employers: audit Section 690 requests and ensure compliance ahead of 6 April 2026 deadline.
2. Employees: maintain records (workday counts, contracts, travel documentation).
3. Consult UK tax adviser if claiming OWR for the first time or when split-365 work/year mixes.
4. Use HMRC guidance tools and rate calculators issued by GOV.UK to check projected relief.