OWR Claim on RSUs vesting in Year 4 (Granted in Year 1)

[Mikhail]

Hi everyone,

I am a non-dom UK resident and I am looking for some clarification on how Overseas Workday Relief (OWR) interacts with RSU vesting periods that span into the 4th tax year.

My Situation:
- I have been a UK tax resident for 3 full tax years. The current tax year (2024/25) is my 4th year.
- I successfully claimed OWR for my first 3 years (2021/22 to 2023/24).
- Upon joining in June 2021, I received RSU grants that vest monthly over a 4-year period (48 months).

The Question: I have a tranche of these shares (granted in June 2021) that was vested in the 2024/25 tax year.

Obviously, I am no longer eligible for OWR on new income in Year 4. However, because these specific shares were granted during my OWR period and relate to employment duties performed over the last 4 years (3 of which were OWR-eligible), can I still claim relief on a portion of this income?

Can I apportion the income so that the portion "earned" from June 2021 to April 2024 is treated as OWR-eligible foreign earnings? Or is the relief strictly cut off for any money received after April 5, 2024?

Any advice on the rules regarding this would be appreciated.

Thanks!

[darthblingbling]

In principle you can, there are boxes on sa109 that refer to OWR refering to prior periods (think it's boxes 2 and 5).

[Mikhail]

Thanks for reply!
Should OWR be calculated according to the days worked outside of the UK during the first 3 years? Or only according to the 1st year ( as grant was received in the 1st year)?
If for example during my 1st year I worked 1/4 of all work days outside of the UK, can I claim 1/4th of RSU vested in 4th year?

[darthblingbling]

With respect to shares and RSUs it can be complex. Generally you'd look at grant to vest, but it depends on the terms of the scheme.

If the tax at stake it pretty significant you may want to consider getting a specialist to do the return.

[Mikhail]

@darthblingbling any suggestions on a tax lawyer who might explore this option for me?

[Mikhail]

Thinking about this once again - my RSUs are paid after each month of my employment - and HMRC might say that they not really contribute to the previous years. For example, if I leave the company earlier than in 4 years - company wouldn't pay me any compensation on non-vested shares.

I guess that in this case the shares vested in 4th year can't be covered under OWR of the first 3 years as they are not actually related to it.
Or we can still question this assumption - for example as a bonus which is paid in the following tax year for the duties performed for the previous tax years (probably I wouldn't be able to get it either if I terminate my contract)?

[darthblingbling]

My firm can, but we're probably at the higher end of the market if I'm honest. What's the tax at stake?