Temporary Repatriation Facility: Five common TRF traps for former remittance basis users

The abolition of the UK remittance basis from 6 April 2025 was one of the most significant changes to the taxation of internationally mobile individuals in many years.

As part of the transition to the new regime, the government introduced the Temporary Repatriation Facility, commonly referred to as the “TRF”.

For some former remittance basis users, the TRF may provide a valuable opportunity to bring historic foreign income and gains to the UK at a reduced tax rate. However, the rules are not always straightforward, and there are several traps for individuals who assume the facility is simple or automatic.

What is the TRF?

The TRF is a temporary measure available for three tax years: 2025/26, 2026/27 and 2027/28. Broadly, it allows certain individuals who previously used the remittance basis to designate qualifying pre-6 April 2025 foreign income and gains and remit those amounts to the UK at a reduced rate of UK tax. The TRF rate is 12% for 2025/26 and 2026/27, and 15% for 2027/28, which is a much more attractive proposition than the normal Income Tax rate of up to 45% on remitted foreign income and 24% on remitted foreign gains. 

The TRF can be helpful for individuals who have built up offshore funds over many years and now want to use those funds in the UK, whether to buy property, fund living costs, support family members or simplify their offshore banking arrangements. 

However, the TRF is not a blanket amnesty and does not automatically apply to every offshore account.

Trap one: Assuming all offshore funds qualify 

The TRF is aimed at qualifying pre-6 April 2025 foreign income and gains. It does not apply simply because funds are held outside the UK.

An offshore account may contain clean capital, taxed income, untaxed foreign income, foreign gains, investment proceeds, loans, gifts or transfers from other accounts. If the funds are clean capital, a TRF designation may be unnecessary. If they are not qualifying pre-6 April 2025 income or gains, the TRF may not apply.

Where an account is mixed, further analysis will usually be needed before a designation is made. 

Trap two: Confusing the TRF with the FIG regime

The Foreign Income and Gains regime, or “FIG” regime, is separate from the TRF.  The FIG regime can provide relief for qualifying new UK residents in respect of foreign income and gains arising during their first four tax years of UK residence. The TRF is aimed at certain historic foreign income and gains that arose before 6 April 2025. 

An individual may need to consider both regimes, but one does not replace the other. 

Trap three: Leaving the review too late 

Although the TRF is available for three tax years, reviewing historic offshore funds can take time. Many former remittance basis users have complex accounts and investment portfolios going back several years. 

A proper review may require historic bank statements, investment reports, foreign and UK tax returns, records of remittance basis claims and details of transfers between accounts. If records are incomplete, the analysis may take longer. 

Waiting until the end of the TRF window could reduce the individual’s options. 

Trap four: Overlooking mixed funds

Mixed funds are often the most difficult area. A mixed fund is an account or asset containing more than one type of fund. For example, an offshore account may contain clean capital, foreign income, foreign gains and investment returns. 

The UK tax rules can prescribe the order in which funds are treated as remitted. This means an individual may think they are bringing clean capital to the UK, when the tax rules treat them as remitting taxable income or gains. 

The TRF can be helpful in some mixed fund cases, but the position should be reviewed carefully before funds are moved. 

Trap five: Designating without understanding the wider position 

A TRF designation can be beneficial, but it should not be made in isolation. Individuals should consider whether the funds would otherwise be taxable if brought to the UK, whether they are clean capital, whether foreign tax has already been paid, whether the funds are personally held or held through a structure, and whether the individual actually needs the funds in the UK. 

In some cases, designating funds may be clearly beneficial. In others, it may be unnecessary or less efficient than expected. 

Practical steps 

Former remittance basis users should consider identifying their offshore accounts and investment portfolios, reviewing which accounts contain clean capital, income or gains, checking whether any pre-6 April 2025 foreign income and gains remain unremitted, and considering whether the TRF could reduce the cost of bringing funds to the UK. 

They should also avoid moving funds before the position is understood, particularly where offshore structures or mixed accounts are involved.

If you need further advice, please contact our International Tax team.