The Temporary Repatriation Facility (TRF) is one of the major transitional reliefs introduced from 6 April 2025 for individuals who previously used the remittance basis.
In simple terms, the TRF allows qualifying individuals to bring pre-6 April 2025 foreign income and gains into the UK at reduced tax rates of:
- 12% for 2025/26 and 2026/27
- 15% for 2027/28
This can be significantly lower than the normal remittance tax rates of 40% or 45%.
However, the real planning opportunities are often found in the detailed rules rather than the headline tax rates.
1. You Do Not Need to Physically Remit the Funds During the TRF Period
One of the most important points about the TRF is that you can designate qualifying overseas income or gains without immediately bringing the money to the UK.
Once designated and taxed under the TRF:
- the funds become “qualifying overseas capital”; and
- future remittances to the UK are free from additional UK tax.
This creates long-term flexibility.
A taxpayer may decide to:
- pay the 12% charge now; and
- keep the money offshore for several more years before eventually remitting it.
This can be extremely valuable for individuals planning:
- future UK property purchases;
- retirement in the UK;
- future investment opportunities; or
- eventual relocation back to the UK.
The key point is that the TRF is not simply a short-term remittance window, it can effectively “cleanse” historic foreign income and gains for future use.
2. TRF Amounts Do Not Affect the £100,000 Personal Allowance Taper
Another major advantage is that designated TRF amounts are not included as income in the normal income tax computation.
This means they do not affect:
- the £100,000 personal allowance taper;
- High Income Child Benefit Charge calculations; or
- pension annual allowance tapering calculations.
This can produce significant tax advantages in the right circumstances.
For example, an individual with employment income already close to £100,000 could designate substantial overseas income under the TRF without causing further loss of personal allowances.
The TRF tax is instead treated as a separate stand-alone charge.
3. Mixed Funds – Consider Opening a Separate TRF Account
Many former remittance basis users hold funds within “mixed funds”.
A mixed fund may contain:
- clean capital;
- foreign income; and
- foreign gains from multiple years.
Normally, the mixed fund ordering rules can create complicated and unfavourable tax outcomes on remittances.
Under the TRF:
- designated qualifying overseas capital is treated as remitted first.
This is helpful, but from a practical perspective many advisers recommend:
- transferring designated TRF funds into a separate bank account; often referred to as a “TRF capital account”.
This is not mandatory, but it makes future remittances much easier to track and evidence.
A separate account can help avoid:
- tracing issues;
- contamination of funds; and
- disputes regarding the source of remittances.
4. Foreign Tax – The TRF Uses the Net Amount
Another important technical point is the interaction with foreign taxes.
Under normal UK tax principles:
- foreign income received net of overseas tax is usually grossed up; and
- foreign tax credit relief may then be claimed.
The TRF works differently.
Where overseas tax has already been suffered:
- the TRF designation is made using the net amount received;
- no gross-up is required; and
- no foreign tax credit relief is available.
This simplifies the computation, but it can increase the effective overall tax cost.
Therefore, taxpayers should carefully compare:
- the benefit of the reduced 12%/15% TRF rates; against
- the loss of foreign tax credit relief.
In some cases, the TRF may still be highly beneficial. The position should be compared on a case-by-case basis, particularly where significant foreign tax has already been suffered.
5. Using FIG Relief and the TRF Together
Some individuals may be able to access both:
- the new Foreign Income & Gains (FIG) regime; and
- the Temporary Repatriation Facility.
This can apply where an individual:
- qualifies for the FIG regime under the four-year residence rules; and
- previously used the remittance basis before 2025/26.
Importantly, the two reliefs apply to different amounts.
Broadly:
- FIG relief can apply to qualifying foreign income and gains arising after the new regime starts; while
- the TRF applies to historic unremitted foreign income and gains arising before 6 April 2025.
This means it may be possible to:
- claim FIG relief for current year foreign income and gains; and
- make a TRF designation for historic offshore funds,
all within the same tax return.
However, comparative calculations are extremely important because:
- claiming FIG relief results in the loss of UK personal allowances and the CGT annual exempt amount; while
- the TRF provides reduced tax rates but no foreign tax credit relief.
The interaction between the two regimes can create significant planning opportunities, but also potential pitfalls if claims are made incorrectly.
Final Thoughts
The TRF is much more than a temporary reduced tax rate.
For many former remittance basis users, it creates an opportunity to:
- restructure historic offshore funds;
- simplify future remittances;
- avoid higher remittance tax rates; and
- secure long-term flexibility for future UK use of overseas wealth.
However, careful tax planning is essential, particularly where:
- mixed funds exist;
- foreign taxes have already been suffered; or
- the taxpayer may also qualify for the FIG regime.
- Taxpayers can now designate specific amounts of historic foreign income and gains, rather than being required to designate all offshore funds.
Taxpayer should be aware that a designation election is irrevocable. Once an amount is designated, the Temporary Repatriation Facility (TRF) tax becomes payable, even if the funds are never subsequently remitted to the UK. Careful cashflow planning and modelling should therefore be undertaken before making an election
For advice on TRF planning, FIG claims and offshore remittance structuring, please contact Shimshon Goodman at FKGB Accounting, either by email shimshon.goodman@fkgb.co.uk or book a zoom meeting on my calendar – https://calendly.com/shimshon-goodman-fkgb/30min.
