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If your company is involved in processing Overseas Workday Relief (OWR) elections and claims for 2025-26 Self Assessment tax returns, you might be facing problems.

HMRC are experiencing an issue processing certain tax elections; 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 of HMRC's issue 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 problem has been raised for investigation and that 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.

The problems

In certain cases, when Boxes 40 through 43 are ticked, 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.

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.

Even trying to rectify the record, instances have arisen where, after official contact with HMRC, some OWR claims are still being rejected even after being added.

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, businesses and individuals should contact their tax adviser or accountant and review any submitted returns that include OWR claims to check that it 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.

It was also recommended that tax to be paid should be based on HMRC’s submitted return and by 31 January 2027. This avoids late payment interest and penalties.

If you have any queries on Overseas Workday Relief or dealing with HMRC, please get in contact.