The Temporary Repatriation Facility (TRF): A light at the end of the tunnel for non-dom’s who wish to stay in the UK
The headlines might be focused on how many non-dom’s and other high net worth individuals are leaving the UK following but for those who choose to remain, the new temporary repatriation facility (TRF) offers some respite and potentially significant tax savings.
Temporary Repatriation Facility – what has changed?
Since 6 April 2025, the concept of domicile has ceased to be a connecting factor for UK income, capital gains and inheritance taxes. The remittance basis of taxation has also been abolished. The remittance basis was available to non-UK domiciled individuals to provide relief from UK tax for non-UK source income and gains.
Whilst the remittance basis has been abolished, the remittance of historic foreign income and gains (FIGs) which were sheltered from a charge to UK tax by virtue of a remittance basis claim, will continue to be subject to UK income or capital gains tax if remitted to the UK at rates of up to 45%.
To help soften the blow of these changes and to encourage individuals to remit to the UK their historic foreign income and gains (FIG) which arose prior to 6th April 2025, the government have launched the ‘Temporary Repatriation Facility’ (TRF).
For those former non-dom’s who plan to remain in the UK and who will at some point look to remit pre-April 2025 FIGs to the UK, the TRF offers significant tax savings, with the right tax planning. (Read more on the Temporary Repatriation Facility on the HMRC website)
What are the key highlights of the Temporary Repatriation Facility?
We asked our Private Client Tax Partner, Adam Thompson to share with us the key highlights of the Temporary Repatriation Facility. This is what he told us:
“The Temporary Repatriation Facility will be available for 3 tax years, from 6 April 2025. Amounts designated under the TRF will be charged to tax at a rate of 12% in tax years 2025/2026 and 2026/2027 with the rate rising to 15% in tax year 2027/2028 (the TRF charge).
The Temporary Repatriation Facility charge will be payable on the designation, but once a designation has been made, no further UK tax will be payable, regardless of the tax year of remittance.
It will not be possible to set any foreign tax paid against the Temporary Repatriation Facility charge because designated amounts are treated as being net of tax.
There is no requirement for amounts to be remitted during the tax year in which they are designated, or in any later tax year. However, in practice, it would not be logical to make a designation, pay the TRF charge and then not remit the designated funds.
Individuals will be able to make a designation on FIG which they remit in the tax year of the claim as well as amounts that they may wish to remit in the future. This is where careful planning is crucial”.
Who can use the Temporary Repatriation Facility?
The TRF is available to any individual who:
- is UK resident for the tax year of designation;
- has previously been subject to the remittance basis for at least one tax year before 2025/26, including where the remittance basis applied automatically; and
- has ‘qualifying overseas capital’ available to designate.
What is ‘qualifying overseas capital’ (QOC)?
The definition of QOC is hugely important when considering the Temporary Repatriation Facility, and is, fortunately for UK taxpayers, rather broad.
An amount of capital will be ‘qualifying overseas capital’ if it falls within one of the following categories:
- Foreign income or gains arising in a tax year before 2025/26 which was subject to a remittance basis claim. This includes amounts that have not been remitted to the UK or are remitted during the TRF period (tax years 2025/26 to 2027/28).
- Amounts held overseas immediately before 6 April 2025 which are of an uncertain source – provided it has been situated outside the UK since acquiring it.
- Certain distributions or benefits received from non-UK Trusts where these can be matched to pre-April 2025 income or gains of the Trust.
In practical terms, QOC will include capital derived from, or including, the following:
- Investment income held in overseas bank and other financial accounts
- Capital gains from the sale of offshore assets, with the proceeds held in overseas bank and other financial accounts
- Income from employment held in an overseas bank and other financial accounts
- Foreign income and gains within offshore trust structures (if the individual is a beneficiary and the trust allows access to those funds)
How to designate funds to qualify for the Temporary Repatriation Facility?
A designation election must be made on an individual’s tax return for the 2025/26, 2026/27 or 2027/28 tax years.
A designation can be amended (or added) at any time within the normal self-assessment tax return amendment window. Therefore, the latest date that an amendment or designation can be made is 31st January 2028 for 2025/26 designations, 31st January 2029 for 2026/27 designations and 31st January 2030 for 2027/28 designations.
A designation must set out the total amount designated and identify which, if any, of the amounts designated have been remitted to the UK in the tax year.
Taxpayers must also keep a record of all amounts designated. This will be even more important where a designation is made, and the funds have not already been remitted.
How does the Temporary Repatriation Facility charge apply and when is it payable?
The TRF charge is due on the total amount of designated qualifying overseas capital.
The TRF charge is payable via the self-assessment system as if it were income tax for the year to which the designation relates. However, it is important to note that the TRF charge is a charge on designated ‘TRF capital’ – it is not a tax on income or capital gains. The TRF charge does not therefore affect any payments on account due for the following tax year.
In a further change to the old remittance basis regime where payment of the remittance basis charge (RBC) would not be treated as a remittance provided payment was made from an overseas bank account directly to HMRC, there is no similar provision for payment of the TRF charge.
Instead, if a TRF charge is paid using pre-6 April 2025 foreign income or gains from an overseas bank account, unless the amount has been designated as qualifying overseas capital, it will be an ordinary remittance, taxed at the usual rates (up to 45%).
Once designated, funds can be brought to the UK without any further tax consequences, even if they are remitted after the TRF has ended.
The amount of the TRF charge is:
- 12% for 2025/26 and 2026/27; and
- 15% for 2027/28.
Mixed Funds and the Temporary Repatriation Facility capital account
UK resident non-domiciles who have previously claimed the remittance basis will likely be familiar with the concepts of “clean capital” and “mixed funds”.
‘Clean capital’ means funds that do not represent foreign income and gains. Common examples are foreign income and gains earned before a non-domiciled person became UK resident, or monies that were a gift or inheritance.
A ‘mixed fund’ is a fund of money or other property which contains or derives from:
- more than one kind of income and/or capital; or
- income or capital from more than one tax year.
In simple terms, a mixed fund is an account or other property which contains or is derived from a mixture of clean capital and foreign income and gains realised whilst an individual was UK tax resident and claiming the remittance basis.
Where amounts are transferred from a mixed fund, complex rules apply to identify the order in which income and gains are deemed to have been remitted to the UK.
This complexity has been reduced under the TRF with the introduction of new ordering rules and the concept of a TRF Capital account.
The ordering rules are modified in two ways where an amount of ‘qualifying overseas capital’ contained in a mixed fund has been designated under the TRF:
- Designated amounts (TRF capital) are treated as being remitted to the UK in priority to any other amounts, regardless of the tax year in which they arose.
- During the TRF period, when analysing mixed funds containing TRF capital, an annualised basis will apply rather than a transaction-by-transaction basis.
The TRF capital account offers a further benefit, it provides a defined fund containing only designated qualifying overseas capital for remittance to the UK which overcomes an additional quirk of the normal ordering rules.
Ordinarily, a transfer from a mixed fund that is not remitted to the UK is treated as being made up of a proportion of each category of income or gains contained in the fund immediately before the transfer. This means that where a mixed fund contains amounts designated as ‘TRF capital’, a proportion of it is deemed to be included in the transfer. This could lead to some, or all the designated amounts being used or spent outside the UK, making it unavailable for remittance to the UK.
The TRF capital account provides a remedy to this – as designated funds can be transferred to it, and provided those funds are not spent outside the UK, no loss of this designated fund will occur.
There are conditions which must be met for a TRF capital account:
- it must be an overseas bank account which, immediately before the first receipt of TRF capital, had a balance of £10 or less.
- HMRC must be notified of the details of the account by 31 January following the end of the tax year in which TRF capital is first paid into the account.
Business Investment Relief (BIR) and the Temporary Repatriation Facility
Under the old remittance basis regime, ‘business investment relief’ (BIR) allowed individuals who used the remittance basis of taxation to bring foreign income and gains into the UK without paying UK tax, if the funds were invested in qualifying companies.
This relief will continue in force for new investments until 5th April 2028, meaning that any pre-6 April 2025 unremitted foreign income and gains that have not been designated for the Temporary Repatriation Facility can be sheltered under BIR up to 5 April 2028 in the normal way.
Funds previously invested under the BIR regime will still be treated as remittances on encashment or other disqualifying events unless the funds are sent offshore within 45 or 90 days (depending on the circumstances).
However, it is possible to designate amounts invested under the BIR regime as QOC. Once designated, there will be no requirement for these amounts to be sent offshore on a future chargeable event.
For individuals who have made BIR investments, designating those may be advantageous.
When should UK taxpayers consider using the Temporary Repatriation Facility?
Any UK resident who has unremitted pre-April 2025 foreign income and gains and has previously claimed the remittance basis will be able to benefit from the Temporary Repatriation Facility.
The TRF will be particularly useful for those who intend to remain in the UK and know that they will need to make future remittances of FIGs to meet their UK expenditure. By planning for such future expenditure now and making the required designations, they could unlock huge tax savings.
Individuals who may have inadvertently created mixed funds, by adding FIG to pre-residence capital, can use the TRF regime to segregate the FIG from their original clean capital.
It is important to note that for funds or other property which remained ‘clean capital’ under the old remittance basis regime, this capital will not lose its designation and will continue to be available to remit to the UK free of tax (provided it is not tainted).
Similarly, whilst the TRF offers a reduced rate of tax on remittances of pre-April 2025 FIG to the UK, it should only be used where there is a current or anticipated future need to remit such funds to the UK, as by designating funds a tax charge will arise, and if these funds are never remitted, that tax charge could have been avoided.
Practical Case Study – Offshore Portfolio
Sergio is UK resident and a former remittance basis user. He has an overseas bank account containing £500,000 of foreign dividend income which arose during the 2021/22, 2022/23 and 2023/24 tax years when he was subject to the remittance basis.
Sergio has not made any remittances to the UK from this account but intends to in the future so wishes to designate the income in his 2025/26 tax return.
The foreign dividend income meets the definition of qualifying overseas capital because it arose before 6th April 2025, has not yet been remitted to the UK, and if it were to be remitted it would be chargeable to income tax.
Sergio can therefore designate the foreign income in his 2025/26 UK tax return and pay the TRF charge of £60,000 (£500,000 x 12%). There will then be no further tax charge when these amounts are remitted, whether this is during or after the TRF period.
Practical Case Study – Mixed funds bank account
Christina is UK resident and a former remittance basis user. On 6 April 2025 she had an overseas bank account containing the following:
- £400,000 foreign income from 2024/25
- £125,000 foreign gains from 2024/25
- £75,000 foreign gains from 2022/23
In 2025/26 Christina designates £300,000 foreign income and pays the TRF charge of £36,000 (£300,000 x 12%) on this amount. She does not make any remittances to the UK or any offshore transfer during 2025/26.
The mixed fund is now made up of the following:
- £300,000 TRF capital
- £100,000 foreign income from 2024/25
- £125,000 foreign gains from 2024/25
- £75,000 foreign gains from 2022/23
On 30 June 2026 she sets up a TRF capital account and transfers £300,000 from the mixed fund to the account.
This TRF capital account is now ringfenced and amounts can be remitted to the UK without a further tax charge arising. Care should be taken not to spend these funds outside the UK to avoid depleting the TRF capital account.
Practical Case Study – Uncertain Mixed Funds
Sofia is UK resident and a former remittance basis user. On 6 April 2025 she has an overseas bank account containing £750,000. She can show that £450,000 of the account balance relates to a foreign gain arising on the disposal of an offshore property that accrued in a year when she was subject to the remittance basis, but she is unsure of the source of the remaining £300,000. There have been no remittances to the UK from this account.
The uncertain amount is qualifying overseas capital, because:
- Violet is uncertain of the source of £300,000 in the account;
- it was held by her immediately before 6 April 2025; and
- it was situated outside the UK throughout the time she held it.
She can therefore designate the £300,000 under the TRF (along with the remaining £450,000 identifiable overseas gain). Once she has designated this amount as TRF capital and paid the TRF charge, Sofia can remit this amount to the UK without a further tax charge arising.
Practical Case Study – BIR investment
Leonardo is UK resident and a remittance basis user. On 1 July 2023 he made a qualifying investment in a UK company by way of a £500,000 loan using foreign income from 2020/21 and claimed BIR.
In 2026/27 he designates £500,000 of the invested foreign income under the Temporary Repatriation Facility and pays the TRF charge of £60,000 (£500,000 x 12%). The investment now comprises TRF capital.
As the whole investment is TRF Capital, on repayment of the loan by the company, no further charge to UK tax will arise, and there will be no obligation for Leonardo to send the funds offshore within 45 days.
Want to talk to us about the Temporary Repatriation Facility, we can help
At RPGCC, we understand the nuances of these significant legislative changes and how they impact former remittance basis users, and can work with those affected to devise an efficient strategy designed with the individual circumstances in mind.
We can assist with:
- Assessing an individual’s eligibility for the Temporary Repatriation Facility
- Reviewing the source and history of offshore funds
- Structuring remittances efficiently and in line with HMRC requirements
- Ensuring full compliance with reporting obligations
- Advising on broader tax planning ahead of the 2028 deadline
The Temporary Repatriation Facility presents an important opportunity but one with stringent conditions attached. For personalised advice or to discuss your specific situation, contact the Tax Team RPGCC today on 020 7870 9050 or email us at hello@rpgcc.co.uk.
