If, prior to 6Th April 2025, you were a non-UK domiciled individual with offshore wealth and a history of using the remittance basis, the Temporary Repatriation Facility (TRF) is an opportunity you don’t want to miss.
HMRC’s new TRF offers a timely opportunity for non-UK domiciled individuals who have historically claimed the remittance basis. For years, many non-UK domiciled have faced complex rules around bringing overseas income and gains into the UK, often deterred by the harsh tax consequences and intricate record keeping requirements. With the TRF, there’s now a window to bring money into the UK at a much-reduced tax cost, and for many, this could be the perfect moment to tidy up long standing offshore accounts whilst benefitting from those funds in the UK.
The Temporary Repatriation Facility (TRF)
Under the TRF, individuals who have previously claimed the remittance basis can elect during the 2025/26, 2026/27 and 2027/28 tax years for foreign income and gains to be taxed in the UK at a flat tax rate. At 12% for 2025/26 or 2026/27 and 15% for 2027/28, this is significantly lower than the potential marginal rates of 45%.
What makes the TRF particularly appealing is its simplification of the notoriously complex mixed fund rules. Traditionally, where offshore accounts held a mix of income, gains and clean capital, any remittance to the UK would trigger the need for a mixed fund analysis, an often exhausting, forensic exercise in trying to determine exactly what portion of a transfer to the UK related to each type of income or gain. This has historically acted as a significant deterrent for many non-UK domiciled individual’s, especially those with years of accumulated offshore income and gains.
The benefits
Under the TRF, a full mixed fund analysis is not required. Instead, individuals can nominate through self-assessment the amount they want to charge to tax under the facility, and that nominated amount is simply eligible for the 12% or 15% tax rate. There is no need to trace each individual transaction or build years’ worth of spreadsheets. This pragmatic approach is a game-changer for those looking to bring funds into the UK for investment, property purchases, or personal spending.
Potential risks
However, the TRF is not without complexity, and there are risks in getting it wrong. Funds brought into the UK outside the TRF’s scope, or after the window closes, could face full taxation and when making an election under TRF extreme care will be needed for any monies left behind in a non-UK account. Likewise, careful thought is needed around which accounts to use, what to nominate, and how to plan future remittances in light of the abolition of the remittance basis.
Seeking professional advice
At this point, tailored advice is crucial. Whether you’re considering a large remittance, reorganising offshore accounts, or simply want clarity on what the TRF could mean for you, we can help. Our team has extensive experience navigating the intricacies of non-UK domicile tax planning and can guide you through the process, from strategy to execution. Contact our team here.
This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. This article is distributed for educational purposes only and should not be considered financial advice.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
The information in this article aims to provide information. However, this is not intended to form professional advice nor should it be relied upon as such and before taking any particular action, specific and personal advice should be obtained. All levels and basis of, and relief from taxation illustrated here are subject to change. Before making any decision, we recommend you consult your financial planner to consider your particular investment objectives, financial situation and individual needs.
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