The Temporary Repatriation Facility (TRF) allows anyone who was taxed in the UK on the remittance basis before 6 April 2025 to bring accumulated foreign income and gains into the country at a rate of 12% in the 2025-26 and 2026-27 tax years, and 15% in 2027-28, instead of the usual income tax and capital gains tax rates. The facility runs for exactly three tax years and closes on 5 April 2028, after which older offshore capital once again becomes taxable at full rates on every transfer into the UK. Below: who is eligible, which amounts can be designated, how the designation mechanism works and where money is most often lost in practice.
What the Temporary Repatriation Facility is
From 6 April 2025 the UK removed the concept of domicile from its tax system and abolished the remittance basis — the principle under which a UK resident with a foreign domicile paid UK tax only on the portion of foreign income and gains actually brought into the country. It was replaced by the FIG regime: full relief on foreign income and gains for the first four years of UK residence, for those who were not UK resident for the ten years before arrival.
The difficulty is that the reform did not wipe the slate clean. Foreign income and gains that arose before 6 April 2025 in years when the remittance basis applied remain taxable on remittance to the UK — indefinitely. HMRC’s guidance on the remittance basis changes confirms that the obligation to tell HMRC about such remittances continues for all previous remittance basis users after 6 April 2025. The temporary window exists precisely for this frozen capital.
The TRF was introduced by Schedule 10 to the Finance Act 2025 and, as the introduction to HMRC’s TRF manual states, it is available for a fixed period of three years: the 2025-26, 2026-27 and 2027-28 tax years. The mechanism is not a discount on a transfer but a separate act: in a tax return, an individual designates a chosen amount of qualifying overseas capital, pays a fixed charge on it, and from that point the designated amount is clean. It can be brought into the UK at any time in the future with no further tax on the remittance.
One further point of principle: the TRF charge is formally a charge on capital, not a tax on income or capital gains. That explains why ordinary reliefs and allowances do not apply to it, and why a remittance basis charge paid in earlier years cannot be offset against it.
Who can use the TRF
According to HMRC’s manual section on eligibility to designate, the facility is available only to individuals who meet three conditions at the same time: they are UK resident in the tax year of designation; they were subject to the remittance basis for at least one earlier tax year; and they hold qualifying overseas capital available to designate.
Residence is determined by the Statutory Residence Test — if you are not resident in the year of designation, the facility is closed to you, even if you qualified before. Where your status has shifted over recent years, the sensible starting point is a review of UK tax residency: it drives both the right to use the TRF and the choice of the best year in which to designate.
The second condition is read more widely than many people expect. It is satisfied not only where the remittance basis was claimed in a return: HMRC states plainly that it is enough for the basis to have applied, including automatic cases — that is, where sections 809B, 809D or 809E of the Income Tax Act 2007 applied for years from 2008-09 onwards. In practice this means the TRF is also open to people with modest unremitted foreign income who never consciously claimed anything.
Who falls outside the facility: anyone who was never subject to the remittance basis; non-residents in the year of designation; and any amounts on which the individual would not personally be taxable if they were remitted. Death is dealt with separately: personal representatives may designate on behalf of a deceased individual, but only for amounts received before the death.
Who tends to benefit most
- Long-term residents with substantial unremitted foreign income and gains
- Those planning a property purchase or major expenditure in the UK
- Owners of offshore assets bought with earlier foreign income
- Beneficiaries of offshore trusts who received capital payments before 2025-26
- Individuals leaving the UK who want to close off a lingering tax exposure
- Families restructuring how their assets are held after the reform
Benefits of instructing an adviser on a TRF designation
- Verification of eligibility across earlier remittance basis years
- Calculation of qualifying overseas capital per account and asset
- Comparison of designation against an ordinary remittance at full rates
- Preparation of calculations and supporting records for the return
- Analysis of mixed accounts and reconstruction of remittance history
- Coordination with banks on transfers of designated amounts
- Monitoring of designation and amendment deadlines
Which capital can be designated
The central concept is qualifying overseas capital. In its manual section on pre-6 April 2025 foreign income and gains, HMRC sets out what it covers: foreign income and gains that arose before 6 April 2025 while the individual was subject to the remittance basis, and that either were never remitted or are remitted during the TRF period. The amounts in scope are those falling under section 832 ITTOIA 2005 (remittance basis income), paragraph 1(2) of Schedule 1 to TCGA 1992 (remittance basis gains), sections 22 and 26 ITEPA 2003 (chargeable overseas earnings), section 41F ITEPA 2003 (foreign securities income) and sections 554Z9 and 554Z10 ITEPA 2003.
Just as important, the facility expressly reaches amounts of uncertain source. Where years of living across several countries have left an offshore account whose balance cannot reliably be broken down into income, gains and original capital, those amounts can still meet the definition of qualifying overseas capital. For many clients this is the most valuable feature of the regime: it closes off historic accounts for which the paperwork can no longer be reconstructed.
Assets bought with earlier foreign income
A separate logic applies to assets — offshore property, a shareholding, works of art bought at some point with foreign income. As HMRC explains in its section on assets derived from foreign income and gains, what is designated is not the current market value of the asset but the amount of pre-6 April 2025 foreign income and gains from which it derives: the acquisition and enhancement costs. No valuation of the asset is required in order to designate it, which makes the exercise materially simpler and cheaper.
The practical effect: if the asset has appreciated since purchase, the historic amount is still what gets designated. On a later sale, the designated funds can be brought into the UK with no further tax on the remittance itself, while any gain on that sale is taxed on the arising basis. Where several assets derive from the same foreign income and gains, designation is made once — the charge is not paid twice on the same underlying amount.
Exempt property and employment income
For property brought into the UK under the exemptions for works of art, personal effects and other categories under sections 809Z2 and 809Z3 ITA 2007, HMRC’s section on exempt property allows a designation of the foreign income from which the property derives while the exemption still holds. If the conditions later cease to be met, or the item is sold in the UK, that becomes a remittance of designated capital — with no further tax due.
Foreign employment income deserves particular attention. Under the section on employment income received on or after 6 April 2025, such amounts can also be designated — provided they relate to duties performed in a tax year ending before 6 April 2025 in which the employee was subject to the remittance basis, and provided they are actually received before the end of the TRF period. A designation cannot be made in advance: only in the year in which the income is in fact received.
Distributions from offshore trusts
Capital payments and benefits from non-resident trust structures can also fall within the facility, under their own rules. In its section on capital payments made by non-resident settlements, HMRC states that the qualifying overseas capital is broadly so much of the payment as is matched to trustees’ gains relating to tax years before 2025-26. For the purposes of that matching, the settlement’s gains pool for years after 2024-25 is assumed to be nil. Payments to other beneficiaries who are themselves ineligible for the TRF — non-residents, or those never subject to the remittance basis — are ignored in the exercise.
Key takeaways on what qualifies
- Only income and gains arising before 6 April 2025 can be designated
- Amounts of uncertain source on offshore accounts are within scope
- For assets, the historic income amount is designated, not market value
- No valuation of the asset is needed for a designation
- Trust payments qualify only to the extent matched to pre-2025-26 gains
- Income and gains subject to an unremittable claim under section 842 ITTOIA 2005 or section 279 TCGA 1992 do not qualify
TRF rates and the cost of a designation
The rate depends only on the tax year in which the designation is made, not on the size of the amount or the type of income. Under HMRC’s manual section on the TRF charge, the charge is 12% of the qualifying overseas capital designated in the 2025-26 and 2026-27 tax years, and 15% in 2027-28. Designation is made in the Self Assessment return for the relevant year, and the section on time limits sets the deadlines.
| Tax year of designation | TRF charge rate | Deadline for designating in the return |
|---|---|---|
| 2025-26 | 12% | 31 January 2028 |
| 2026-27 | 12% | 31 January 2029 |
| 2027-28 | 15% | 31 January 2030 |
The deadline is set as the anniversary of the 31 January following the end of the tax year — twelve months from the normal filing date. A designation may be amended within that same period. The exception is where a notice to file was issued after 31 October: the amendment window then runs for three months from the date of the notice. Outside the period for amendment a designation cannot be withdrawn, even if the funds turn out never to be needed in the UK.
It is equally important to understand what the charge does not give. Ordinary reliefs do not reduce it: a remittance basis charge paid in earlier years cannot be offset, the payment does not affect payments on account for the following year, and it cannot frank tax on Gift Aid donations. Under the section on foreign tax credits, foreign tax credit relief is not available against the TRF charge — although the rate applies only to the net amount after foreign tax has been deducted. A full credit for foreign tax remains available in one case only: where the designation is not made and the funds are brought in as an ordinary remittance under the general rules.
And the costliest technical detail of all. Where the charge is paid with money transferred from abroad, that money must itself be designated. Otherwise the transfer counts as an ordinary remittance of foreign income taxable at full rates: the exemption that applied to the remittance basis charge under section 809V ITA 2007 has no equivalent here.
How a designation is made: five stages
On paper a designation looks like a few figures in a tax return. In practice most of the work sits in the preparation: identifying which amounts relate to the period before 6 April 2025, unpicking mixed accounts, judging how much capital is worth designating in a given year, and building calculations that will stand up to scrutiny. The sequence below is typical; the timings are indicative and depend on how complex the asset structure is.
Review of offshore accounts and the source of capital
Calculation of the amount and the cost of designating
Designation of the capital in the Self Assessment return
Transfer into the UK and evidence of source of funds
Planning for capital left over once the window closes
One nuance often upsets plans: the designation is made after the tax year has ended, when the return is filed, but it is treated as having taken place at the start of the year to which the return relates. That allows capital to be designated retrospectively against transfers already made — but only within the statutory time limits. If you file a Self Assessment tax return each year in any event, a designation belongs in that annual cycle rather than in a last-minute decision.
Mixed accounts and the order of remittances
The mixed fund rules have always been the heaviest part of working with offshore accounts. Where a single account holds foreign income, gains on asset sales and original capital from different years, every transfer into the UK has to be unpicked in the strict statutory order. For three years, the TRF makes that mechanism materially simpler.
First, designated capital takes priority. As HMRC’s helpsheet HS264 puts it, TRF capital gets remitted in priority to any other amounts in the fund, regardless of the year in which they arose. Once a designation has been made, a transfer out of a mixed account into the UK therefore uses up the designated capital on which the charge has already been paid.
Second, an annualised basis of accounting applies for the life of the facility. Under the section on the annualised basis, all remittances in a tax year can be totalled and treated as a single remittance made at the end of the year, instead of analysing each transaction separately. This is not an election but an automatic mechanism: it applies wherever TRF capital is present in a mixed fund during the year. It is limited to the three years of the facility and ceases to apply on 6 April 2028. One caveat matters: the deemed year-end timing governs only the composition of the remittance, not the date on which the transfer actually took place.
Third, the nominated income rules are relaxed. Normally, remitting nominated income and gains above a nominal £10 allowance triggers the specific ordering rules in sections 809I and 809J ITA 2007 — a mechanism capable of making later remittances extremely expensive. Under the section on nominated income and gains, during the TRF period such amounts can be remitted without engaging that ordering; more than that, the nominated income need not itself be designated provided UK tax has already been paid on it in full. From 6 April 2028 the ordering rules apply again.
The practical conclusion is straightforward: three years is a window not only for a reduced rate but for putting offshore accounts in order. A sensible sequence is to designate, move the designated amounts to a separate clean account, and run subsequent transactions from there without remixing them with the balance.
What the TRF offers holders of offshore capital before 2028
- A fixed rate of 12% or 15% instead of the usual tax rates
- Freedom to choose the amount: part of the capital may be designated
- The right to remit designated capital at any point in the future
- Priority treatment for designated amounts in a mixed account
- Simplified annual accounting for transfers within the window
- Scope to designate assets bought with earlier foreign income
- Relief from the ordering rules that apply to nominated income
The facility does not, however, resolve everything on its own. It has no bearing on the taxation of future income, it does not remove reporting obligations, and it does not touch the new inheritance tax rules built on length of UK residence. For wealthy families the TRF is usually one element of broader tax planning for HNWI rather than a strategy in itself.
The TRF and the four-year FIG regime
The two regimes are easy to confuse, although they deal with different periods. The FIG regime gives relief on foreign income and gains arising from 6 April 2025 in the first four years of UK residence, provided the individual was not UK tax resident for the ten years before arrival. The TRF deals only with capital that arose before that date.
As HMRC explains in its section on the FIG regime and the TRF, one does not exclude the other: an individual who was previously subject to the remittance basis but is now within the first four years of UK residence following ten years of non-residence may qualify for both. What is not possible is claiming FIG relief on foreign income and gains that arose before 6 April 2025 while the remittance basis applied — whatever the date those amounts are remitted. For that capital the choice remains between a TRF designation and an ordinary remittance at full rates.
A further point for planning: claiming the FIG regime means losing the personal allowance and the capital gains tax annual exempt amount for the year in question. The decision about which year to claim FIG relief and which year to designate under the TRF is therefore normally modelled together rather than separately. Further detail on the new rules sits on the page about the UK FIG tax regime.
Documents and data needed for a designation
There is no separate application or bundle to be filed with HMRC in advance: the designation is made in the return. That does not reduce the preparatory work, though — the calculation must be reproducible and the composition of the amounts capable of being evidenced. The following is usually required.
- Bank statements for offshore accounts covering the remittance basis years, ideally from the opening of the account
- Copies of earlier UK tax returns and records of the remittance basis being claimed
- Documentation for assets bought with foreign income: contracts, payment instructions, evidence of enhancement expenditure
- Statements and confirmations from trustees on capital payments and matched gains
- Evidence of foreign tax paid on the relevant income and gains
- A currency conversion calculation: helpsheet HS264 uses the 6 April 2025 rate for income and the rate at the date of disposal for gains
- Details of remittances into the UK in the year of designation, where funds have already been brought in
For clients with a long history of living across several countries, reconstructing the account history is the most demanding part. Where records for particular years have been lost, the position is not hopeless: as noted above, amounts of uncertain source can also fall within qualifying overseas capital. The treatment of such balances is best agreed with an adviser in advance rather than at the point of filing.
Worked examples
The examples below are illustrative and are given to show how the mechanism operates. Actual consequences depend on individual circumstances, the composition of assets and the history of residence.
Example 1. A mixed account and a house purchase
A UK resident since 2014 applied the remittance basis for many years. An offshore account holds the equivalent of £2m, of which calculations attribute £800,000 to foreign income and gains arising before 6 April 2025 and the balance to original capital. A house purchase in London is planned. Designating £800,000 in the 2025-26 return produces a charge of £96,000 at 12%. The designated amount then leaves the account in priority, and the transfer funding the purchase gives rise to no further tax on the remittance. Brought in without a designation, the same sum would be taxed at the usual income tax and capital gains tax rates — at the higher rates, a difference measured in hundreds of thousands of pounds. Property taxes on the transaction itself are calculated separately.
Example 2. A painting brought in as exempt property
A client bought a painting some years ago with foreign income and brought it into the UK using the exemption for works of art. While the exemption holds there is no tax on the remittance — but selling the painting in the UK, or breaching the exemption conditions, would create a full remittance of foreign income. Designating the income from which the painting derives, during the life of the facility, fixes the cost of that exposure at the charge for the current year. No valuation of the painting is needed: the historic acquisition amount is what gets designated.
Example 3. A distribution from an offshore trust
A beneficiary of a non-resident trust received a capital payment matched to trustees’ gains for the 2019-20 and 2021-22 years. The beneficiary is UK resident and previously applied the remittance basis, so the unremitted part of the payment may become qualifying overseas capital. What matters in the calculation is that the matching follows the facility’s own rules and that payments to beneficiaries with no TRF entitlement are left out. Structures like this almost always call for joint work with the trustees and for international tax and estate planning.
Behind the abstract calculations sit individual people with particular plans. Below are several client stories on tax planning around moving to and living in the UK.
Client stories on tax planning in the UK
Tax planning in England for a client with an investor visa
Andy is a long-standing client of Imperial & Legal. We helped him to obtain a UK investor visa and settle in London. He is originally from South Africa, but he changes locations quite often to...
Tax planning for a foreign person when moving and buying a property in England
Pablo is originally from South America. He has been living in Britain for several years. His business involves supplying construction equipment to...
Tax planning for married couple relocating to UK
Madina and Yuri are a married couple from Kazakhstan. They relocated to the United Kingdom a year ago when Yuri was invited to join a project to develop educational computer games. He agreed right...
One of these clients explained why he chose to work through his tax burden with advisers rather than alone.
As an experienced businessman, I believe that if there is an opportunity to optimise your expenses, you should take it! When I moved to the UK, I immediately became interested in legal ways to reduce my tax burden, but I decided to entrust the solution to this issue to professionals, so I turned to Imperial & Legal again. The specialists of the company did everything at the highest level!
TRF or an ordinary remittance: a comparison
A designation is not always better than simply bringing the funds in. The key differences are set out below — and they also show where the calculation deserves particular care.
| Feature | TRF designation | Ordinary remittance, no designation |
|---|---|---|
| Rate | 12% in 2025-26 and 2026-27, 15% in 2027-28 | Usual income tax and capital gains tax rates |
| Foreign tax credit | Not available; the rate applies to the amount net of foreign tax | A full credit is available under the general rules |
| Order within a mixed account | Designated amounts are remitted first | The ordinary mixed fund rules apply |
| Obligation to remit funds | None: the capital may stay offshore | Tax arises at the point of remittance |
| Duration | The 2025-26 to 2027-28 tax years only | Indefinite, for all older capital |
| Reporting | Designation in the return for the relevant year | The remittance is reported for the year it is made |
The main case in which a designation may be the weaker option is income already bearing high foreign tax. There, the charge without any credit should be compared against an ordinary remittance where a credit is available. The second case is modest amounts that will realistically never move to the UK: paying a charge today for an option that goes unused may make little sense. General approaches to calculations of this kind are set out on the page about tax optimisation.
Common mistakes with the TRF
Mistakes here are expensive and mostly irreversible: outside the amendment window a designation cannot be withdrawn. The following tend to come to light only after the return has been filed.
- Paying the charge with money transferred from abroad that has not itself been designated, so the transfer becomes an ordinary remittance at full rates
- Waiting for the final year of the facility, when the rate rises to 15% and the cost of the decision increases by a quarter
- Missing the designation deadline, so the reduced rate for that year is simply lost
- Designating the market value of an asset instead of the foreign income from which it derives
- Relying on FIG regime relief for capital that arose before 6 April 2025
- Designating income bearing high foreign tax without comparing it against a full credit on an ordinary remittance
- Assuming that a designation obliges the funds to be brought into the UK, when no such obligation exists
- Working with a mixed account without reconstructing its remittance history, which understates the qualifying capital
Trust structures form a category of their own. There the error usually arises not in the beneficiary’s return but at the level of matching payments against trustees’ gains, and it surfaces years later. Where a trust sits in the structure, the calculation is best agreed with the trustees before the return is filed rather than after.
Tax advisory
Support with a TRF designation
Eligibility review
Analysis of residence history and earlier remittance basis years.
Qualifying capital calculation
Mixed accounts, assets and trust payments analysed year by year.
Designation in the return
Calculations, currency conversion and Self Assessment filing.
Support on remittances
Bank documentation and coordination of designated transfers.
What to do before 5 April 2028
The TRF is the one measure in the reform that works in favour of those who relied on the remittance basis for decades, and it does not work for long. Three tax years is not much once account history has to be reconstructed, calculations agreed with trustees and a decision reached on how much to designate in each year. The practical minimum for the near term is to establish how much capital relates to the period before 6 April 2025 and to price the decision at the current 12% rate, before it rises to 15%.
This material is for information only, reflects the official rules at the date of publication and is not individual tax or legal advice. The consequences of any step depend on specific circumstances: residence history, the composition of assets, the presence of trust structures and foreign tax already paid. Discuss your position with a qualified adviser before making a designation.
