What’s Changed Starting 6 April 2026
1. Overseas Workday Relief (OWR) PAYE Notification Limits
Employers submitting a PAYE notification for employees qualifying for OWR must ensure the estimate of non-UK earnings is realistic—and the non-PAYE portion cannot exceed 30% of gross earnings. This reform aims to prevent underpayment of UK tax for those splitting workdays between UK and abroad.(gov.uk)
2. Removal of Homeworking Expense Relief (Non-Reimbursed)
Employees can no longer claim income tax relief for additional household costs from working at home (utilities, phone, etc.) from 6 April 2026. Employers can still reimburse these costs without triggering tax or National Insurance contributions, under qualifying conditions.(gov.uk)
3. Expanded Exemptions for Employer-reimbursed Costs
From 6 April 2026, reimbursements for:
- Eye tests, including glasses for Display Screen Equipment (DSE) users
- Flu vaccinations
- Home-working equipment (e.g., desks, monitors) become tax- and National Insurance-free when reimbursed or provided. This aligns reimbursed costs with previously exempt employer-provided costs.(gov.uk)
Global Nomad & Remote Worker Impacts
- Individuals splitting time between the UK and other countries must review PAYE structure—OWR changes may affect those with travel-heavy roles. If non-UK work becomes too large a share, you might lose some relief or be subject to higher UK withholding.
- Employees who had been claiming homeworking expenses directly: you’ll no longer qualify under the old rules, unless reimbursed by your employer.
- Employers now have incentive to reimburse rather than require employees to front the costs. Clear policies and record-keeping of equipment or service purchases are essential.
Compliance Steps for Employers & Remote Teams
- Review current PAYE notifications for OWR eligibility, confirming they are below the 30% non-PAYE cap.
- Update expense policies to reimburse eligible equipment, eye tests, flu jabs. Give staff clear guidance and receipts for reimbursement paths.
- Payroll systems must be updated to ensure reimbursements are processed tax-free where permitted. Disclose policy changes to employees.
- Communication: employees need to know changes—especially remote/nomadic staff who previously relied on claiming non-reimbursed costs.
Practical Examples
- Digital nomad based in Spain working partly in UK: if 35% of your work is outside UK and you apply under OWR, you’ll breach the new 30% cap—losing SWEPU (something withheld etc.) relief and facing higher withholding.
- UK-based employer with employees working from home in multiple compliance: shifting to reimbursements for eye tests, equipment purchases, flu vaccines results in tax and NIC savings across the workforce.
Key Takeaways
- Employees: keep detailed records, watch how your employer handles reimbursements vs self-funding.
- Employers: audit PAYE structures for remote staff, train payroll teams on new reimbursement exemptions.
- Remote teams/nomads: seamless coordination between home & host tax jurisdictions remains vital—clarify which days are non-UK for OWR, reconcile timesheets carefully.
Conclusion: The UK’s reforms from April 2026 reshape the terrain for remote working, employer reimbursements, and tax reliefs. Understanding where you fall, how much of your work is non-UK, and whether expenses are reimbursed will help you stay compliant—and save tax.