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Garden leave and overseas workday relief

If I was overseas during Garden Leave, can I claim overseas workday relief (OWR) for those days?

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Hi -- I was employed in the UK last year, and claimed both Overseas Workday Relief for overseas workdays, as well as Remittance Basis for my UK tax return.

I left my employer over the summer, with my final workday in August, after which I was placed on Garden Leave until September. I permanently left the UK in August and spent my Garden Leave overseas, and started new full time employment overseas in November.

Would the days on Garden Leave count as overseas workdays for Overseas Workday Relief?

  

 

Replies (17)

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By Duggimon
03rd Dec 2020 11:54

How much of your job was overseas? If it wasn't all/most of it then I think it would be hard to argue the earnings were not general earnings in respect of duties performed in the United Kingdom, regardless of where you were physically located at the time.

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By AL222
03rd Dec 2020 19:29

Thanks. Typically around 25% of my job was Overseas

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A Putey FACA
By Arthur Putey
03rd Dec 2020 12:13

Assuming your GL pay was processed through PAYE as usual, as there were no duties to perform at all (and therefore none in the UK) while on GL I don't see why you couldn't include it in your OWA claim.

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By AL222
03rd Dec 2020 19:34

Yes processed through PAYE as usual. No duties to perform. Thanks for the feedback.

Given the differing perspectives-- is this a gray area? Is anyone aware of any specific guidance from HMRC that may be helpful?

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By Tax Dragon
04th Dec 2020 07:04

Pretty sure it's not a grey area. People respond in here (and I'd suggest the same is true in any public forum) without looking up the rules.

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A Putey FACA
By Arthur Putey
04th Dec 2020 12:10

... which can be found here (well the guidance at least, for the rules you'd have to dig deeper
https://www.gov.uk/government/publications/rdr4-overseas-workday-relief-...

I would contend that there is some greyness in the OP's case, due not only to the GL but also to the fact that he left the country before it started, which requires consideration of the SRT and split years. But given that the OP appears to have been taxed on the GL pay, it is perhaps easier for him to make the OWA claim in good faith and see if it is challenged, rather than either not making it or going down a more complicated route.

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By Tax Dragon
04th Dec 2020 12:37

Arthur Putey wrote:

I would contend that there is some greyness in the OP's case, due not only to the GL but also to the fact that he left the country before it started, which requires consideration of the SRT and split years.

That doesn't make it grey. It just means there are more rules to work through and apply.

(Incidentally, I have no view on the answer. I did wonder how, if the employer was UK based, as sounds likely - though that is grey, in the question - the earnings were not effectively remitted at the point of receipt. But I wasn't looking up rules [that comment was not aimed at you, BTW, but at Aweb respondents at large, including myself], so it was left as a point of wonder. I would need to look things up - and for the OP to be less grey - to have a view.)

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A Putey FACA
By Arthur Putey
04th Dec 2020 12:57

I've not found a specific reference to Gardening Leave so if none exists it could be argued either way. I prefer the absence of UK duties argument but that doesn't mean I am correct.

Yes the remittance basis makes an interesting circular argument. If you are claiming OWA and your salary is paid into a UK bank account, an OWA claim might be offset by the tax you pay on the "remittance" at point of receipt. But I'm sure there are rules for that so its a whimsical thought.

If I were in the OPs position and had thought about this in advance, I would have informed my employer that I was leaving the UK and asked them to put me on an NT tax code on the basis that I will be non resident and not performing any duties in the UK from that point.

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By Tax Dragon
04th Dec 2020 13:10

Arthur Putey wrote:

I'm sure there are rules.

Me too. We don't operate in a [grey] vacuum - though too long in this forum might make you think otherwise.

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A Putey FACA
By Arthur Putey
05th Dec 2020 12:36

Begs the question, what's the point of the forum? If the answer to any question from a non-accountant is "work it out for yourself or pay for advice from an accountant" and from an accountant "you ought to know". Yes, we should find more interesting things to do, there is no excuse for being on here when we have the internet, TikTok, YouTube and endless other distractions!

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By The Dullard
05th Dec 2020 12:46

Arthur Putey wrote:

Begs the question, what's the point of the forum?

I can answer that. The point is for fellow accounting professionals - peers - to exchange views on topics and assist each other's understandings of specific applications of, for example, accounting standards and tax laws. Peers have a better tendency to spot when other peers may not be sure of their ground, whereas Joe Public have a massive tendency to happily go with any answer given, as long as it's the answer that they want. Nice weekend.

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By Tax Dragon
06th Dec 2020 09:14

Arthur Putey wrote:

Begs the question, what's the point of the forum?

What begs that question? You were sure there were rules, and I agreed.

The answer to your question though is (in my view) pretty much as The Dullard says. Also, have a look at the How to Use Any Answers document. It's permanently on display at the top of the forum. There's a section headed "What is Any Answers for?" Have a read. Do you disagree with it? Which bit?

I quote: "Any Answers is a forum for anyone with an interest in accountancy to ask questions." Rightly or wrongly, that purposely does not exclude the public - but it's purposely not saying "come here for free advice." Tax rules are legion: it's highly likely, as in this case, that a member of the public, seeking free advice, would ask the 'wrong question' and/or not provide the facts necessary to advise; it's highly likely, as in this case, that one or more respondents, no doubt seeking to be helpful, would try to answer despite their own ignorance of the rules and/or having to make assumptions about the facts. (And despite it being, quite possibly, the wrong question.) My preferred option is normally to remain silent, as I genuinely think not answering is better than giving a bad answer. (For the avoidance of doubt, I consider you answers here "bad".) But I could see that the OP (much as The Dullard explains) was about to leave taking your bad answer as good. So I intervened (while, I think wisely, maintaining my silence vis-à-vis the question).

"How to use" continues:
"All registered members who have logged into the site can respond to the questions." (This includes non-accountants, by the way. I often wonder about the thinking of people who come here off the streets expecting that everybody else is an accountant.)

How to use explains:
"Please note that the people who answer are often professionals who are sharing their expertise for the greater good of the community." Adding: "They are not here to provide free accounting advice."

I agree wholeheartedly with what one member wisely said, quoted at the end of "what's it for?"

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By The Dullard
05th Dec 2020 12:42

There's no such thing as overseas workday relief. It's an HMRC invention which bastardises what the law actually says, and then they issue reams of nonsense guidance to try and make it their rules.

What the law actually says is that:
- a non-UK resident is taxable only on employment earnings to the extent that the employee's duties are performed in the UK.
- a UK-resident non-dom is liable to tax on their UK employment income only on a remittance basis (subject to a claim or automatic application) to the extent that their duties are performed outside the UK.

Days just don't come into it.

So, during your gardening leave, where did you perform the duties that you didn't have, and are you claiming that you are non-resident on a split year basis (you should) or that you are resident but non-domiciled and not remitting the income (you shouldn't).

In the first case, since none of your gardening leave duties are performed in the UK, none of the income for those non-duties is taxable.

In the second case, none of your gardening leave duties are performed outside the UK, so none of the income has remittance basis protection.

Do you see the distinction, and why it's a waste of time asking folk off the internet to give you free advice.

Because we haven't even considered whether the earnings are general earnings, falling within the above statements, or specific earnings within ITEPA 2003, Pt 6 (potentially Ch 2 or, more likely, Ch 3) where there are completely different rules.

But hey, why not rely on some geezer off the internet, who can look at HMRC misguidance which doesn't cover the specific situation, not bother considering (or, worse, not even know any detail - just that there must be some - of) the underlying law, and give you their misinformed opinion.

Do you see how internet advice works now?

People that want the RIGHT answer have a tendency to expect to pay for it in my experience.

Good weekend.

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By Tax Dragon
04th Dec 2020 16:54

The touch of colour this thread badly needed.

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A Putey FACA
By Arthur Putey
05th Dec 2020 12:59

True, but the OP asked the question in the conext of OWA, a notion he is familiar with and has apparently applied when completing previous years' tax returns. If he approached me just on that point I doubt it would be worth a formal engagement, unless he wanted broader advice and/or his tax return preparing and filing.

I think Aweb has disclaimers about not relying on anything and all that.

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By The Dullard
05th Dec 2020 13:09

Outside the dizzy realms of the internet, I would not be providing any advice to anybody, particularly on a technically complex matter (which this is when undertaken by non-laxadaisical professionals), without being (1) provided with all the necessary information to provide the advice, (2) engaged as their adviser, and (3) paid sufficient to compensate me for the years of learning, experience and perpetual research of similar issues that puts me in the, apparently unique, position of being able to advise them properly. And I will decline any engagement where I think I lack the competence to provide proper advice, despite knowing that there are others in the world with no such qualms.

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A Putey FACA
By Arthur Putey
08th Dec 2020 18:25

Apologies for the delayed reply, the remainder of the weekend and work intervened. As it has been suggested I have given a "bad" answer without an explanation of why it was incorrect and as I this thread referenced in a separate discussion on, er, the point of this forum, I won't comment further. Especially the OP is long gone, in more than one sense.

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