Autumn Budget – The highlights series by Sopher + Co (Article 3: Long Term UK Residence - Temporary Repatriation Facility)

Welcome to article 3 in our ‘Autumn Budget – The highlights series’, if you have missed any of the previous articles you can view them here.

Among the updates in the Autumn Budget delivered by Rachel Reeves was confirmation and additional detail on the Temporary Repatriation Facility (TRF), which allows unremitted foreign income and gains to be taxed at favourable rates in a 3 years window.

We discussed the TRF opportunity with Andrew Gill, Tax Manager, who shared the following key points:

• Eligibility: The TRF is available to individuals who have previously claimed the Remittance Basis. To make a designation of funds, individuals need to be UK tax resident in the year of designation. There is no need to remit the funds to the UK to transfer the funds to a separate account.

• Window of Opportunity: The facility will run for 3 tax years. Designated amounts will be taxable in the year of designation as income. In the years 2025-26 and 2026-27 the tax rate will be 12%, in 2027-28 the tax rate will be 15%. No foreign tax credit will be available.

• Designation Flexibility: Designation can be made over cash and foreign income and gains traced into assets. There is no need for exact amounts to be calculated, traced or identified. Partial claims are allowable, as are amounts in excess of the actual foreign income and gains. 

• Non-designated amounts: unremitted income and gains will remain taxable when remitted to the UK, a Foreign Tax Credit may be claimed if available. There are changes to the ordering rules on remittances from mixed funds for the TRF years, with TRF designated funds being remitted in priority. A TRF designated account offshore can be nominated to act as if it was a remittance to the UK.

• CGT rebasing to April 2017 values on directly held assets, this is available for individuals who were non-UK domiciled and not deemed domiciled immediately before becoming long term UK resident. April 2017 rebasing continues for individuals who became deemed UK domiciled in April 2017.

For those who have mixed funds, or segregated accounts holding foreign income, or unremitted funds traced into assets, this provides an opportunity to cleanse funds at an attractive rate of 12% allowing for future use within the UK.

As an additional consideration for remittance basis users in 2024-25 becoming long term resident in April 2025, is the choice to either rebase assets to April 2017 values or realise gains before April under the remittance basis and then designate the unremitted amounts in 2025-26 cleansing the fund.

Please note, this information is intended as a general overview. It is important that professional advice is sought on specific issues relevant to your circumstances. If you’re considering making a designation and would like to speak with one of our tax specialists, please contact us to find out more.