188ÌåÓý

The Finance Act 2025 introduced a new temporary repatriation facility (TRF) as part of a wider set of measures removing the concept of domicile as a relevant connecting factor in the tax system.

From 6 April 2025 it is no longer possible to use the remittance basis of taxation. However, former remittance basis users may have amounts of pre-6 April 2025 foreign income and gains which arose during a period in which they were subject to the remittance basis, which are capable of being remitted and taxed in the future.

The TRF is aimed at encouraging former remittance basis users to remit those pre-6 April 2025 foreign income and gains, and a low tax rate will be available for individuals that choose to use the TRF. The TRF is a temporary measure, available for a fixed period of 3 years: the 2025-26, 2026-27 and 2027-28 tax years.

To use the TRF individuals must designate amounts on which they pay the TRF charge. The amount designated can be pre-6 April 2025 foreign income and gains or amounts held overseas where they are uncertain as to the source.

Once designated, amounts are treated as an amount of capital on which the TRF charge is paid. If the amount is subject to foreign tax it is treated as an amount of net capital. No credit for foreign tax paid is available against a TRF charge � see RDRM73330.

Individuals do not have to remit the designated amount during the TRF period in order to benefit from the low tax rate, although they can if they choose to.Ìý

In order to be designated, the amount must meet the definition of ‘qualifying overseas capital� � this is explained at RDRM72000 onwards. Individuals must meet specific eligibility criteria to be able to use the TRF � see RDRM73200.

The designation process is explained at RDRM73000 onwards, along with guidance on future remittances of designated qualifying overseas capital. Where an individual designates amounts in a mixed fund, the designated qualifying overseas capital will be available for remittance in priority to other income and capital in the fund � RDRM75000 onwards explains this.

Designations are not limited to money held overseas. For example, pre-6 April 2025 foreign income, gains and amounts of uncertain origin that have been used to purchase overseas property could be designated, as could amounts that have been invested in a UK company on which business investment relief (BIR) has been claimed. For details on the scope of designation, see RDRM74000 onwards.