RDRM74400 - Temporary repatriation facility: Scope of designation: Exempt property
Under the remittance听basis rules contained within听section 809L ITA 2007,听property and assets that are purchased out of, or otherwise derive from foreign income and gains that are brought to, received听or used in the UK by, or for the benefit of, a relevant person would constitute a taxable听remittance听(see听RDRM33100听onwards).听听
The legislation provides several听exceptions to this rule at section 809X ITA 2007听which enables听certain property to be remitted to the UK without attracting a tax charge. Such property is known as 鈥榚xempt property鈥� (see听RDRM34070听for further guidance on what falls within this definition).听If听such an听asset ceases to be exempt property听(see听RDRM34080),听or it is sold, and the proceeds are not taken offshore within a specified period, a taxable remittance will occur.
A听designation under the temporary repatriation facility (TRF) can听be made in respect of the foreign income听or gains听from which the exempt property derives.听听
A听designation听can听be made whilst听the property is听still exempt so听that if, in the future, the asset ceases to be exempt property,听this will be a remittance of designated qualifying overseas capital and therefore no further UK tax will be payable.听听听
A designation can also be made if, during the TRF period, the exempt property ceases to meet any of the exemption rules, or is sold, or converted into money whilst in the UK.听
Example听1听
Franck听is听UK resident听and听a former remittance basis user. In December 2025听he visits听family in听Paris听and purchases听a designer听watch听and bracelet听for 拢14,000 using his听foreign听income听from 2020-21 held in a French bank account. He gifts the jewellery听to his wife, Veronica,听once back in the UK.听听
As the watch and bracelet derive from Franck鈥檚 pre-6 April 2025 foreign听income,听bringing听them to the UK would ordinarily result in a taxable remittance. However, as the watch and bracelet听are owned by a relevant person (his听spouse) and are听for her own personal use, both items of jewellery are听deemed听to be exempt property under the personal听use rule听within听section 809Z2 ITA 2007.听听
Franck听has therefore听not made a chargeable remittance. He is, however, still able to designate听the听foreign听income听that was听used to purchase听the jewellery. This is the case even if听the jewellery currently still meets the definition of exempt听property听within听section 809X ITA 2007.听听听
Example 2听
Isabella is UK resident and a former remittance basis user.听On 6 April 2025 Isabella听arranges for a valuable painting,听which she purchased听at auction in Italy听for 拢2m听out of her foreign听income听from 2023-24,听to be shipped to a specialist restoration studio in the UK for repair听and cleaning.听
As the painting derives from 滨蝉补产别濒濒补鈥檚 pre-6 April 2025 foreign income, bringing it听to the UK would ordinarily result in a taxable remittance.听However, because听the painting meets the repair rule (see section 809Z3 ITA 2007), the painting is exempt property for as long as it meets the conditions and is not treated as remitted on 6 April 2025.听
The restoration work is finished on 1 July 2025 and the painting is put into storage at the studio鈥檚 secure warehouse,听in preparation for Isabella to arrange to ship听the painting back to Italy, to keep at her apartment in Rome.听听
On 15 July 2025听Isabella decides to keep the painting at her London apartment and has听it transported there听instead. The听painting therefore ceases听to be exempt property on 15 July 2025, because it ceases to meet the repair rule and does not meet any other rules, resulting in a听taxable remittance of the听foreign income deriving from the painting.听
As Isabella is able to听make designations under the TRF in 2025-26 she can designate听the 拢2m, which means that she would pay the TRF charge of 拢240,000 (12% of 拢2m) instead of paying tax at the usual rates on the remittance. If Isabella听wants to designate听the 拢2m, she must do so in her 2025-26 tax return as this is the year that she remitted it.听
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