Temporary Repatriation Facility (TRF)

Introduction

The remittance basis was abolished with effect from 6 April 2025, but foreign income and gains to which it applied continue to be taxable if remitted. To encourage former remittance basis users to bring funds to the UK, for a three-year period the TRF will apply a 12% or 15% tax rate to remittance basis foreign income and gains. Up to 45% tax would normally otherwise apply on remittance.

No further tax charges would arise if funds to which the TRF has applied are remitted.

This note provides a high-level overview of the TRF.

Eligibility

The TRF is available to individuals who:

• Are UK resident for the tax year of designation;
• Have paid tax under the remittance basis of taxation (either automatically or due to making a claim); and
• Have ‘qualifying overseas capital’ that they can designate.

Non-UK residents cannot use the TRF. This is relevant to individuals who were previously UK resident and may return to the UK in the future. Individuals who resume UK residence during the TRF period can apply the TRF to remittance basis foreign income and gains. Individuals who resume UK residence in 2028/29 or a later tax year will not be able to use the TRF, so will pay up to 45% tax on any taxable remittances that are made.

Key features of the TRF

Tax rate

• The TRF applies a 12% or 15% flat rate of taxation to designated amounts.
• Funds that are designated in 2025/26 or 2026/27 are subject to the 12% TRF tax rate.
• Funds that are designated in 2027/28 are subject to the 15% TRF tax rate.

Designation of qualifying overseas capital

• To use the TRF, individuals must designate the qualifying overseas capital on which they wish to pay tax.
• The types of qualifying overseas capital that can be designated are:
  • Foreign income and gains that arose in 2024/25 or an earlier tax year to which the remittance basis applied. This includes both amounts the individual holds personally and amounts held by relevant persons (e.g. spouses, trustees) that would give rise to a tax charge for the individual on remittance.
  • Amounts where the source of funds is uncertain.
  • Capital payments that are received from non-UK trusts during the three-year TRF period, where the capital payment is matched to certain types of trust income or gains that arose in the trust before 6 April 2025. The TRF cannot apply to income distributions received during the TRF period.
  • Settlors of settlor-interested trusts can apply the TRF to trust income which arose prior to 2025/26 and would have resulted on a tax charge for the settlor except for the remittance basis applying.
• Amounts can be designated if they are either held offshore, are remitted in the tax year of designation, or are in the UK but have not been taxed due to an exemption or business investment relief applying.
• It is possible to designate both cash and illiquid funds – e.g. amounts invested in shares or property.
• Where assets are owned jointly, individuals can designate their share of the jointly-owned assets.

Calculations

• A flat rate of tax applies to designated funds so detailed computations are not required.
• The TRF is applied to net amounts after deduction of foreign taxes. Relief is not available for foreign taxes paid, so these do not need to be calculated. If the foreign tax credits that would otherwise be available are high taxpayers may prefer not to designate funds which are eligible for the high foreign tax credit.

Making the designation

• Designations must be made on tax returns.
• The applicable tax rate (12% or 15%) is determined based on the tax year for the tax return of designation.
• If funds are remitted to the UK in the TRF period, the designation must go on the tax return for the tax year of remittance or the funds must be designated in an earlier year. For example, if funds are remitted in 2026/27, a designation can be made in the 2025/26 or 2026/27 tax return. A designation cannot be made on the 2027/28 tax return, as this is after the tax year of remittance.
• Funds which are not remitted during the TRF period can be designated during any of the three years of the TRF period, but the lower 12% tax rate only applies to 2025/26 and 2026/27 designations.

Time limits

• A designation must be made by the deadline for amending the tax return, which is the first anniversary of 31 January following the end of the tax year. For example, the 2025/26 tax year ends on 5 April 2026, the 2025/26 tax return is due by 31 January 2027 and can be amended up to 31 January 2028. Therefore the time limit for making a designation for the 2025/26 tax year is 31 January 2028.
• Designations cannot be amended or withdrawn once the time limit for amending the tax return on which the designation was made has passed - even if an individual changes their mind and decides that the funds will never be remitted. This should be borne in mind when deciding if and how much to designate.

Effect of designations on other taxes

• The TRF charge does not impact other parts of the income tax and capital gains tax computations. This means that it will not reduce the personal allowance (it is reduced for incomes in excess of £100,000), nor will it use lower rate tax bands or the capital gains tax annual exemption.
• It is also ignored when calculating income for tax relief on pension contributions purposes. This means that tax relief on pension contributions will not be available or increased due to TRF-charged amount.
• The charge is not treated as tax paid for the purpose of Gift Aid donations.The TRF charge will not create or inflate payments on account.

Remitting designated funds

• While designation is required to access the TRF, the actual remittance of funds is not necessary.
• No further tax charges will arise on remittance of designated funds that have been taxed under the TRF.
• Remittance of previously untaxed remittance basis foreign income and gains in order to pay the TRF is a taxable remittance. It is possible to claim the TRF on the remitted funds.

Mixed funds

• Where accounts contain amounts that have been designated under the TRF and other funds, TRF designated amounts are treated as being remitted first.
• TRF capital accounts can be set up to contain only TRF-designated funds that would not be taxable on remittance, in order to keep these funds separate from other funds. Conditions apply.

Find out more…

This note reflects the law in force as at 30 June 2025. It does not cover all aspects of this subject. If you would like to find out more please contact your usual Deloitte contact or, if you do not have one, Michelle Robinson (michellerobinson@deloitte.co.uk). For further information visit our website at www.deloitte.co.uk.