What is the Temporary Repatriation Facility (TRF)?
The Temporary Repatriation Facility (TRF) is a part of broader changes to the UK's tax regime for non-domiciled individuals, including the introduction of the Foreign Income and Gains (FIG) regime and changes to Inheritance Tax rules. It is set to take effect from April 6, 2025 . Here are the key points about the TRF:
Purpose and Eligibility
The TRF is designed to allow individuals who have previously claimed the remittance basis to bring pre-April 6, 2025 foreign income and gains as well as mixed funds into the UK at reduced tax rates. The window is limited in time and if you think you will need to bring to the UK untaxed income and gains at some point in the future you need to take action today.
Duration and Tax Rates
The TRF will be available for three tax years, from April 6, 2025, to April 5, 2028, with the following tax rates:
- 12% for tax years 2025/26 and 2026/27
- 15% for tax year 2027/28
Rebasing
On top of the reduced rate applied to remittances, there will also be the option of rebasing assets held personnaly (as of April 5th 2017 (and not 2019 as had been previously mentioned) if:
- one has not been UK domiciled or deemed domiciled at any time before tax year 25/25
- one has claimed the remittance basis on one of the tax yars 17/18 to 24/25 (meaning there is still time to amend a tax return if need be).
Rebasing will allow people to to reduce their gains on sales of assets and also allow for simpler calculations as paperwork for early years is typically difficult to locate.
Process
Individuals can designate amounts or assets as "designated funds" and pay the relevant TRF charge on them. Any TRF designation must be made as part of the Self-Assessment tax return and by the normal filing date of 31 January following the end of the tax year to which it relates. While no supporting evidence or calculations for the designation will need to be included with the tax return, such documentation will need to be retained in case required as part of an HMRC enquiry.
Once the TRF charge is paid on designated funds, they can be remitted to the UK tax-free, either during the TRF period or in future tax years. Offshore monies used to pay the TRF tax will represent a remittance to the UK in all cases– contrarily to the remittance basis charge (RBC) which can bypass the remittance if paid directly into the HMRC offshore account.
Trust Structures
The TRF will also be available for qualifying UK resident settlors or individuals who receive a benefit from an offshore trust structure during the 3-year TRF period, provided certain conditions are met. In particular,
- The TRF will not be available for income distributions received from offshore settlements.
- FIG that arose to a remittance basis user prior to 6 April 2025 will continue to be taxed at full rates if it is remitted to the UK and has not been designated and taxed under the TRF.
- From 6 April 2025, the protection from taxation on future income and gains as it arises within trust structures will be removed for all current non-domiciled and deemed domiciled individuals who do not qualify for the new 4-year FIG regime.
What about Business Investment Relief (BIR)?
Business Investment Relief will be available for qualifying investments of non-designated pre-6 April 2025 foreign income and gains made on or after 6 April 2025. In addition, the TRF facility can be used for designated funds within the 3 year period (to 5 April 2028) if needed at the new reduced TRF rates.
From 6 April 2028, it won’t be possible to claim BIR on any new investments or reinvestments. However, those investments already made before then will continue to benefit from the BIR rules, unless a potentially chargeable event (PCE) occurs. If a PCE occurs the only mitigation step available, to prevent a taxable remittance, would be to take the funds offshore.
Conclusion
The TRF is seen as a pragmatic measure to assist in the transition to the new tax rules for non-UK domiciled individuals. It provides an opportunity for those with untaxed foreign income and gains to bring them into the UK tax net at reduced rates. However the facility is only available for 3 years so action will have to be taken during that period if you want the ability to bring into the UK untaxed income at a reduced rate.
