The remittance basis was abolished eighteen months ago, and most of what I read about the changes still focuses on the new foreign income and gains (FIG) regime. For many former non-doms, though, the part of the 2025 reforms that matters more is the temporary repatriation facility (TRF). It lets you pay a flat 12% on old offshore income and gains, and the 12% rate only has one more tax year to run.
What replaced the remittance basis
Since 6 April 2025, domicile has largely dropped out of UK tax. In summary:
- The four-year FIG regime. If you become UK resident after ten consecutive tax years of non-residence, you can claim relief on most foreign income and gains for your first four tax years here, whether or not you bring the money to the UK. You claim it year by year, and in any year you do, you lose your personal allowance and your capital gains tax annual exempt amount.
- Overseas workday relief (OWR). OWR now runs for the same four years. You no longer have to keep the earnings offshore, but the relief is capped each year at the lower of £300,000 and 30% of the qualifying employment income.
- Rebasing. Some former remittance basis users who held foreign assets on 5 April 2017 can use their value on that date as the base cost when they sell, if they meet the conditions.
- Inheritance tax. Whether you are within the scope of inheritance tax now depends on long-term UK residence, not domicile.
What hasn't gone away is the old money. Foreign income and gains that arose while you were on the remittance basis are still taxed at your normal rates if you bring them to the UK. The TRF is there to deal with that.
I think the new regime is simpler, and it suits people who come to the UK for a few years and then leave. Four years is not long, though, and as claiming costs you your allowances, it is not always worth claiming. The people hit hardest are those who have been here a long time with years of savings abroad, and they are the people the TRF is really aimed at.
How the TRF works
You can use the TRF in a tax year if you are UK resident in that year and you were subject to the remittance basis for at least one earlier year. That includes years where the remittance basis applied automatically, for example because your unremitted foreign income and gains were under £2,000.
You "designate" an amount in your Self Assessment return and pay a flat charge on it: 12% for designations in your 2025/26 and 2026/27 returns, and 15% in your 2027/28 return. The facility closes on 5 April 2028.
More can be designated than most people expect. It covers foreign income and gains that arose in your remittance basis years (dividends, interest, gains and overseas earnings), assets bought with that money, funds abroad where you are unsure of the source, and certain payments and benefits from offshore trusts that are matched to income or gains arising in the trust before 6 April 2025.
A few points worth knowing:
- You do not have to bring the money in. Once you have designated it and paid the charge, you can bring the designated amount to the UK whenever you like, including after the TRF ends, with no further UK tax on it. Income or gains the money earns afterwards are taxed in the normal way.
- Designated amounts sit outside your normal tax calculation, so they do not affect your adjusted net income, your tax bands or your payments on account.
- You can designate part of a fund rather than all of it.
Where it can help
1. Money you brought in last tax year. If you used pre-April 2025 offshore money in the UK during 2025/26 (for a house deposit, school fees, or spending on a card linked to an overseas account), you can only get the 12% rate on it by designating it in your 2025/26 return. It cannot be carried forward to a later year. The return is due by 31 January 2027. You can add a designation by amending the return up to 31 January 2028, but it is much easier to deal with it now. If you only check one thing, check this.
2. Old overseas earnings. Plenty of people working for international businesses claimed OWR before April 2025 and kept the overseas part of their pay in a foreign account. Those earnings can be designated. If you plan to use that money in the UK, 12% is likely to be a lot cheaper than income tax at up to 45% when you remit it.
3. Tidying up mixed accounts. If you have ever had to work through a mixed offshore account, you will know how painful the ordering rules are. Designated money is treated as leaving a mixed fund first, and you can still designate amounts where you cannot establish the source. For some people, paying 12% to stop worrying about remittances for good is worth it on its own. Be careful, though. Because designated money comes out first, a transfer between offshore accounts can take the designated money with it, so keep designated funds in a separate account.
4. Assets, not just cash. You do not have to sell an asset to use the TRF. If you bought a painting or an overseas property with remittance basis income or gains, you can designate the money used to buy it. Bringing the asset (or later the sale proceeds) to the UK then does not trigger a charge on that money. Any gain on a future sale is taxed in the normal way.
5. Offshore trusts. If you are a beneficiary and receive capital payments or benefits while the TRF is open that are matched to pre-April 2025 trust income or gains, you can designate those amounts. Finance Act 2026 tightened the rules here, with retrospective effect, and in some cases the same money now has to be designated twice. Trustees and beneficiaries should take advice before a distribution, not after.
Things to watch out for
- Paying the charge from untaxed funds. If you pay the TRF charge from an overseas account holding undesignated pre-2025 income, the payment to HMRC is itself a taxable remittance. HMRC uses this as an example in its own guidance.
- No credit for foreign tax. You cannot set foreign tax paid on the income or gains against the TRF charge. Instead, you designate the amount left after foreign tax.
- Designating money you will never use here. Once a return can no longer be amended, a designation cannot be withdrawn and the charge is not refunded. Designate what you expect to bring in, not everything you have abroad.
- Residence. You have to be UK resident in the tax year you designate for, so if you are thinking of leaving the UK, the timing matters.
- Records. You do not send your workings to HMRC with the return, but you need to be able to support every figure if asked.
My view
I spent many years at HMRC, and I would expect TRF designations to get attention. The CIOT has said it expects a significant number of enquiries. Filling in the box on the return takes minutes. The real work is tracing the money and keeping a clear record of how you arrived at each figure, and that is what protects you if HMRC asks.
I think the 12% rate is the most generous part of the whole package. If you were on the remittance basis and have money abroad that you will want in the UK at some point, it is well worth looking at. The Budget is on 28 October. Nothing about the TRF has been announced ahead of it, although some in the profession have called for an extension. I would plan on the rules as they stand rather than wait and hope.
How we can help
If you were on the remittance basis at any point before April 2025 and still have money or assets abroad, or you brought some into the UK last tax year, we would be happy to help. We can work out what qualifies, whether it makes sense to designate in your 2025/26 or 2026/27 return, and what records you will need, while the 12% rate is still available.
You can get in touch through our contact form or email us at hello@rmhoconsulting.com.
Best regards,
Rob Osborne BA CTA
Director, RMHO Consulting
www.rmhoconsulting.com
This article is general information and is not advice on your circumstances. The rules are complex and depend on your facts, so please take advice before acting.