Maximising the 12% TRF opportunity
For many former remittance basis users, the abolition of that regime on 6 April 2025 left a significant question unanswered: what happens to foreign income and gains accumulated offshore over the years that have never been taxed in the UK? The answer is that they remain within the scope of UK tax if and when they are brought here. The question is no longer whether that moment will come, but whether you use the window that currently exists to manage it on your terms.
That window is the Temporary Repatriation Facility, introduced under Schedule 10 of the Finance Act 2025. It runs for three tax years, including 2025/26, 2026/27, and 2027/28. It offers former remittance basis users the ability to designate pre-April 2025 foreign income and gains at a flat rate of either 12% or 15%, depending on when the designation is made. The alternative, for anyone who does not act within the window, is to pay tax at full marginal rates when those funds are eventually remitted; up to 45% on income and 24% on gains.
The rates, the window, and why timing matters
The TRF applies at 12% to designations made in 2025/26 and 2026/27, and at 15% to designations made in 2027/28. At the time of writing this article, we are currently in the 2026/27 tax year. This means the 12% rate is available, but only until 5 April 2027. After that, the rate rises to 15% for one final year before the facility closes entirely on 5 April 2028. There is no extension and no retrospective access.
For those with large offshore balances, the difference between acting now at 12% and waiting until 2027/28 at 15% can be significant. For anyone who misses the window entirely, the exposure reverts to full marginal rates with no facility to soften the impact.
You do not need to move the money to lock in the rate
One of the most important features of the TRF is that you do not need to physically bring funds to the UK in order to use it. The mechanism works through designation. On your Self Assessment return for the relevant tax year, you designate the amount of qualifying overseas capital on which you wish to pay the TRF charge. You pay the flat rate, 12% now, via Self Assessment, and from that point, the designated funds are treated as clean capital. You can leave them offshore indefinitely, or remit them to the UK at any point in the future, including after April 2028, with no further UK tax liability arising on those amounts.
Who qualifies and what counts
To use the TRF you must:
- be UK resident in the tax year of designation,
- have used the remittance basis in at least one tax year before 6 April 2025, and
- have qualifying overseas capital.
This can include funds held within offshore structures such as trusts and companies, and can also extend to funds of uncertain or mixed source held offshore. This is useful where detailed records of the original composition of offshore accounts are unavailable.
The TRF charge is collected through Self Assessment and is due by 31 January following the end of the tax year of designation.
How we can help
Deciding whether to use the TRF and in which tax year requires careful review of the funds you hold offshore and their composition. Furthermore, the interaction with your overall UK tax position, the nature of the underlying income and gains, and whether foreign tax has already been paid on those amounts all need to be considered. The HMRC guidance, set out in RDRM73000 in the Residence, Domicile and Remittance Basis Manual, is detailed, and the correct application requires care.
We work with former remittance basis users to assess whether the TRF is appropriate for their circumstances, calculate the amounts available for designation, and correctly manage the designation on their Self Assessment return. If you have not yet considered what the abolition of the remittance basis means for your offshore funds, now is the time to do so.
The 12% window does not reopen after April 2027. Get in touch, and we will help you understand whether the TRF works in your favour and what acting now could save you.