The abolition of the UK’s non-domicile regime on 6 April 2025 marked one of the most significant changes to the UK personal tax system in a generation.

For individuals who previously used the remittance basis, the reforms have created an important question: what happens to the foreign income and gains accumulated before 6 April 2025 that have not yet been remitted to the UK?

The Temporary Repatriation Facility (TRF) provides a limited-time opportunity to deal with certain historic foreign income and gains at significantly reduced rates of tax.

For individuals with substantial historic offshore wealth, the TRF may provide an opportunity not only to reduce the tax cost of bringing funds or assets into the UK, but also to simplify the complex record-keeping associated with historic mixed funds.

What is the Temporary Repatriation Facility?

The TRF is a transitional measure introduced alongside the abolition of the remittance basis.

It is available for three tax years:

• 2025/26
• 2026/27
• 2027/28

Eligible individuals can elect to designate certain pre-6 April 2025 foreign income and gains, together with certain overseas assets representing those amounts, as qualifying overseas capital.

The designated amount is subject to a special TRF tax charge at:

• 12% for designations made in 2025/26 and 2026/27; and
• 15% for designations made in 2027/28.

This can represent a significant saving compared with the tax that could otherwise arise if historic foreign income and gains are subsequently remitted to the UK under the ordinary rules.

Importantly, the individual does not have to bring the designated funds or assets to the UK at the time of designation. Designation and remittance are separate events, providing flexibility over when the funds are actually brought to the UK.

Why could the TRF be valuable?

Former remittance basis users may have accumulated foreign wealth over many years, often across several bank accounts, investment portfolios and other assets.

These funds can contain a mixture of:

• foreign income;
• foreign capital gains;
• clean capital; and
• amounts where the precise historic source is difficult to establish.

Under the ordinary remittance rules, determining the tax consequences of transferring money from a mixed fund to the UK can be complicated. The ordering rules can mean that taxable income or gains are treated as remitted before other capital, potentially resulting in an unexpected UK tax charge.

The TRF can provide an opportunity to simplify this position.

Once qualifying overseas capital has been designated and the TRF charge has been paid, the designated amount is treated as capital for the purposes of the remittance rules. In particular, designated TRF capital can take priority when determining what is remitted from a mixed fund.

This can provide considerably greater certainty when accessing historic offshore wealth in the future.

You do not necessarily need to have cash sitting in an overseas bank account

The TRF is not restricted to cash. Subject to the detailed qualifying conditions, designation can potentially apply to foreign income and gains that have been used to acquire other overseas assets.

For example, qualifying amounts may have been used to:

• purchase an overseas property;
• acquire investments; or
• make an investment in a UK company where business investment relief has been claimed.

This means that a review of the individual’s wider historic offshore wealth may be necessary before determining whether the TRF is available and how much should be designated.

What about offshore trusts?

The TRF can also be relevant where historic foreign income and gains are held within offshore trust structures.

Offshore trusts can have accumulated pools of income, capital gains and offshore income gains. Under the relevant trust matching rules, distributions and benefits received by UK-resident beneficiaries can potentially be matched against those historic pools, resulting in a UK tax charge.

In certain circumstances, capital distributions or benefits received during the TRF window may qualify for designation where they are matched to pre-6 April 2025 accumulated income, gains or offshore income gains.

This can potentially allow qualifying amounts to be taxed under the TRF at 12% or 15%, rather than at the rates that could otherwise apply.

However, the position is highly fact-specific. The distinction between income and capital distributions, the relevant trust pools, the matching rules and the individual’s historic remittance basis position all need to be considered carefully.

Trustees and beneficiaries should therefore consider the TRF when reviewing planned distributions from offshore trusts during the three-year TRF period.

Key points to consider

The TRF can be highly valuable, but it is not automatically available and will not necessarily be appropriate in every case.

Some important points include:

Eligibility
An individual must have used the remittance basis in at least one tax year before 2025/26 and be UK resident in the tax year in which the designation is made.

The detailed eligibility conditions should be reviewed before making a designation.

The designation is made through Self Assessment
The TRF election is made through the individual’s Self Assessment tax return.

A designation can generally be made or amended within the normal amendment window, meaning the second 31 January following the end of the relevant tax year.

Foreign tax credits are restricted
Foreign tax paid on the underlying income or gains cannot be credited directly against the TRF charge.

There may, however, be circumstances where deduction relief is available when determining the amount subject to the TRF.

The TRF does not always produce the lowest overall tax cost
The 12% or 15% rate can be very attractive, but designation should not be considered in isolation.

For example, the interaction with foreign tax systems needs to be considered. A TRF charge may not necessarily qualify as a creditable tax in another jurisdiction, potentially creating double taxation.

The individual’s future residence, plans to remit funds and wider wealth planning objectives should also be taken into account.

Timing matters
The TRF is available only for a limited period. The rate is 12% for 2025/26 and 2026/27, increasing to 15% for 2027/28.

Individuals should therefore consider whether there is a benefit in making a designation earlier rather than waiting until the final year of the facility.

At the same time, there may be circumstances where designating an amount is unnecessary for example, where the individual expects to leave the UK and has no intention of remitting the relevant funds.

A valuable opportunity, but careful planning is essential

For former remittance basis users with significant historic offshore wealth, the TRF represents a rare opportunity to address historic foreign income and gains at a substantially reduced rate of tax.

It can also provide a practical way of reducing the complexity associated with historic mixed funds and giving individuals greater certainty over the future use of their offshore wealth.

However, the rules are detailed and the most tax-efficient approach will depend on the individual’s historic remittance basis position, the nature and location of their assets, any offshore trust arrangements, foreign taxes suffered and their future UK residence and remittance plans.

How we can help

We can help former remittance basis users assess whether the TRF is available and whether making a designation is commercially sensible and tax-efficient.

Our review can include:

• identifying qualifying overseas capital;
• reviewing historic mixed funds and remittance histories;
• assessing the appropriate amount to designate;
• considering offshore trusts and potential distributions;
• assessing the interaction with foreign taxes;
• considering the timing of designation and future remittances; and
• supporting the Self Assessment reporting and TRF election.

If you have historic offshore income, gains or assets that were accumulated while using the remittance basis, now is a good time to review whether the Temporary Repatriation Facility could simplify your tax affairs and reduce the cost of bringing your wealth into the UK.