Annie Bouch
Managing Associate, Private Wealth and Tax
Hi Hannah. The way non-UK domiciled individuals are taxed in the UK has significantly changed since the 6 April ’25. The Government has introduced a brand new concession called the temporary repatriation facility, the TRF. Could you tell us some more about this please?
Hannah Dart
Of Counsel
Of course. The TRF is available to any former remittance basis user who has foreign income and gains which they would like to bring to the UK. The individual can nominate the funds under the TRF and bring them into the UK paying a reduced rate of tax. The rates of tax are 12% if the designation is made in the 25/26 or 26/27 tax years and 15% if it’s made in the 27/28 tax year.
Annie Bouch
Managing Associate, Private Wealth and Tax
So the whole point is to encourage people to bring and spend their FIG in the UK and actually, that was one of the issues with the remittance basis because by its very nature, it didn’t incentivise people to bring their FIG to the UK. But if the TRF is not claimed properly and people do remit their unremitted FIG then they will be subject to tax up to 45%. So what should people do to make sure they claim the TRF correctly?
Hannah Dart
Of Counsel
So, anyone who wants to claim the TRF needs to have claimed the remittance basis in a previous tax year, then they need to make the necessary election in their tax return for the year in question. They will need to identify and designate the FIG which they intend to claim the relief on, they will need to claim that and then pay the tax within the usual deadlines that apply to self-assessment returns so, if the designation is being made in the current tax year then the election needs to be made by 31 January 2027. An individual can designate any FIG, including where it’s been used to purchase property so the fact that the FIG might now be illiquid does not prevent a designation being made. In that case however, thought will need to be given to how to fund the tax due.
Annie Bouch
Managing Associate, Private Wealth and Tax
Are there any issues with making a broad designation of all FIG?
Hannah Dart
Of Counsel
Potentially. So where an account represents mixed funds, if the entire account is designated then tax will be due on the full value even though some of it might have been clean capital which could otherwise have been brought into the UK without any tax charge. Put another way, HMRC is not going to prevent you over designating and therefore paying more tax than is necessary. And how would this apply to FIG in trusts?
Annie Bouch
Managing Associate, Private Wealth and Tax
Well, that’s where it gets a little bit more complicated, but in a nutshell individuals who receive a trust distribution can claim a TRF. In some cases it applies to beneficiaries who received a distribution before the 6 April ’26 and in other cases, it applies to capital distributions made during the TRF three year window that you mentioned earlier provided that there is pre-6 April income and gains that have not been matched arising within the trust. Overall, the TRF is a very useful concession and it will be important that the clients make the most of it to ensure they use it to the fullest advantage. And we have more information on the TRF on our non-dom hub.