HMRC are experiencing an issue processing certain 2025-26 Self Assessment tax returns which include elections for Overseas Workday Relief (OWR). Despite this, taxpayers should still pay any tax due by 31 January 2027.
The Chartered Institute of Taxation (CIOT) and the Association of Taxation Technicians (ATT) have warned that HMRC are having a problem processing 2025-26 Self Assessment tax returns where an election is made for Overseas Workday Relief (OWR) and the OWR transitional provisions also apply.
HMRC have confirmed that the issue has been raised for investigation and they will provide an update in due course. There is currently no official advice on how to submit claims so that they are processed correctly. There is also no timescale for resolving returns already submitted.
What is going wrong
- Returns are affected where Box 43 is ticked together with Box 40 and/or Box 41 on the residence, foreign income and gains (FIG) regime pages.
- Box 40 and Box 41 are used to make the election and subsequent claim for OWR.
- Box 43 is used to confirm a taxpayer qualifies for the OWR transitional provisions.
- HMRC may log the return as received without capturing the information on it. This is resulting in the individual’s Self Assessment balance showing as nil.
- Contacting HMRC should result in the return being added to a worklist. Despite this, it seems some OWR claims are still being rejected even after being added.
- Taxpayers have received letters saying their claims have been rejected for not completing Box 47. Box 47 reports the maximum OWR financial limit, and HMRC’s own help sheet confirms this is not required when the transitional provisions apply.
- The letters are therefore inconsistent with HMRC’s guidance and are not always copied to authorised agents.
PAYE applications under s.690
S.690 applications have also been rejected where the OWR transitional provisions apply. HMRC say this appears to arise from a similar issue with how the financial cap is applied.
- Applications under s.690 allow PAYE to be operated on a reduced amount of earnings, being those relating to UK duties only.
Next steps
Until HMRC confirm a solution, CIOT and ATT have recommended that advisers should:
- Review any submitted returns that include OWR claims to check that the return has been processed correctly by HMRC and that the Self Assessment reflects the information submitted.
- Follow up with HMRC where a return does not appear to have been processed correctly.
- Manage client expectations on possible delays, particularly where the problem could hold up a repayment.
- Advise affected individuals to pay any tax due by 31 January 2027, based on the liability on the submitted return, to avoid late payment interest and penalties.
Useful guides on this topic
Overseas Workday Relief (OWR)
What is Overseas Workday Relief (OWR)? When does it apply? What are the recent changes to OWR?
Self Assessment Return 2025/26: What's new?
2026 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2026. Additional reporting requirements for directors of close companies are one of the significant issues this year: what needs to be reported, and how? What is the latest guidance?
Penalties: Late Payment
What penalties are charged when tax is paid late?
External links