IRS Streamlined Foreign Offshore Procedure: Remittance Years

Under the IRS Streamlined Foreign Offshore Procedure, foreign income left offshore under the UK remittance basis still belongs on the US return for the year it arose. The UK taxed it only when remitted, sometimes years later; the US taxed it immediately. The streamlined pack must report it in dollars, in that year, with the accounts that held it disclosed.

This guide is for US citizens and green card holders who lived in London and claimed the remittance basis before it was abolished on 6 April 2025, and who now need to bring their US filings up to date. It explains why "it was not taxed in the UK" does not mean "it is not on the US return". It shows where the foreign tax credit timing breaks down when UK tax arrives in a later year. It sets out what the IRS and HMRC primary sources actually say about the remittance basis charge, and lists the records a streamlined submission needs for those years. It is written for preparation and compliance. It does not cover how or when to remit funds.

Why does income the UK did not tax still belong on the US return?

The two systems decide when to tax in different ways. The United States taxes citizens and green card holders on their worldwide income in the year it is received or realised, wherever they live and wherever the money is held. Before 6 April 2025, the remittance basis let a UK-resident non-domiciled individual pay UK tax on foreign income and gains only when they were remitted to the UK. Foreign income left in an offshore account was not taxed in the UK at all until it was brought in.

The US Internal Revenue Code has no equivalent deferral for a US person's foreign investment income. Interest credited to a Channel Islands deposit account in September 2022 was US gross income for the 2022 calendar year. A gain on shares sold through a Swiss custody account in January 2024 was a 2024 capital gain. Neither is affected by the UK treating them as unremitted. The UK election changed which UK tax year, if any, would tax the income. It never changed the US year.

This is the most common misunderstanding we see in catch-up cases for London-based Americans. Many of them, and sometimes their UK advisers, treated a remittance basis claim as making the offshore income "non-taxable". When the US returns were filed (if they were filed at all), the unremitted income was left off, or the returns were not filed because there seemed to be "nothing taxable". The streamlined procedure exists for exactly this kind of non-wilful error. But fixing it means building the US figures from scratch for every affected year. The UK computations do not contain them.

The IRS has said the two UK bases are different taxes

The IRS's own analysis supports treating the two UK systems separately. In Revenue Ruling 2011-19, the IRS concluded that the UK arising basis and the remittance basis are separate levies for foreign tax credit purposes. One taxes income as it arises. The other taxes only UK-source income and foreign income or gains remitted in the year, whenever they first arose. A tax on remittances is, by design, a tax on a different event from the one the US taxes. That is why the timing gap described below exists.

Which old remittance-basis years fall inside the streamlined lookback?

The IRS streamlined foreign offshore page requires delinquent or amended returns for the three most recent tax years whose due date has passed. It also requires FBARs for the six most recent years whose FBAR due date has passed, and a signed Form 14653 certification of non-wilfulness. You must also meet the non-residency test in at least one of the three return years. For a US citizen, that means no US abode and at least 330 full days outside the US. Our guide to the non-residency test for London-based executives covers it in detail.

Because the UK tax year runs from 6 April to 5 April and the US year follows the calendar, every US year straddles two UK years. For a submission prepared in late 2026, the return years are typically 2023, 2024 and 2025. Mapped onto the UK calendar, that looks like this:

US return year (calendar)	UK tax years it overlaps	UK basis available in those UK years	What the US return must contain
2023	2022-23 (to 5 April 2023) and 2023-24	Remittance basis could be claimed in both	All foreign income and gains received or realised in calendar 2023, remitted or not
2024	2023-24 (to 5 April 2024) and 2024-25	Remittance basis could be claimed in both (2024-25 was the last year)	All 2024 foreign income and gains, including gains on assets sold while unremitted
2025	2024-25 (to 5 April 2025) and 2025-26	Remittance basis to 5 April 2025; arising basis (with possible FIG regime relief for qualifying new arrivals) from 6 April 2025	All 2025 foreign income and gains, plus any foreign tax credits from UK tax actually paid or accrued in 2025

The six-year FBAR window goes back further and usually covers several earlier remittance-basis years. The accounts that held unremitted money in those years still need FBARs, even though their income for those years falls outside the three return years. For returns, the procedure only requires the three covered years. That is a feature of the streamlined terms, not a statement that earlier unremitted income was never taxable in the US.

How the US and UK years diverge: a worked example

The figures below are fictional and simplified. They show the mechanics only. Exchange rates are illustrative assumptions, not historical rates. A real return uses the actual rates for each transaction, or, where the rules allow, a yearly average rate for income items.

The facts

• Claire is a US citizen who moved to London in 2018 and was UK resident and non-UK domiciled throughout. She claimed the remittance basis for 2021-22, 2022-23 and 2023-24. She was not resident long enough for the remittance basis charge to apply in those years.
• On arrival she moved pre-arrival savings into an investment account outside both the UK and the US. From September 2021 that account received bond interest of £20,000 every 30 September and 31 March. The interest stayed in the account.
• On 15 January 2024 she sold a share holding through the same account. It had cost £300,000 in 2019 (assume $1.30 per pound, so $390,000) and sold for £420,000 (assume $1.26, so $529,200). The UK gain was £120,000. Measured in dollars, the US gain was $139,200.
• From 2024-25 she was taxed on the arising basis, so UK tax on later interest was paid through Self Assessment in the normal way.
• In December 2025 she transferred funds to the UK. The transfer included the £240,000 of interest and gains that arose while she was on the remittance basis. She designated that amount under the Temporary Repatriation Facility (TRF) at the 12% rate for 2025-26, a UK charge of £28,800.
• She filed no US returns or FBARs for any of these years. She believed that income "not taxed in the UK" did not need to be reported.

US year of tax against UK year of tax

Item	Amount (GBP)	US year taxed	UK year taxed	UK basis
Interest 30 Sep 2021 and 31 Mar 2022	£40,000	2021 and 2022 (before the three return years; account still on FBARs)	2025-26	Remitted and designated under the TRF
Interest 30 Sep 2022	£20,000	2022	2025-26	TRF
Interest 31 Mar 2023 and 30 Sep 2023	£40,000	2023 (return year)	2025-26	TRF
Gain on shares, 15 Jan 2024	£120,000 ($139,200 US gain)	2024 (return year)	2025-26	TRF
Interest 31 Mar 2024	£20,000	2024 (return year)	2025-26	TRF
Interest 30 Sep 2024 and 31 Mar 2025	£40,000	2024 and 2025 (return years)	2024-25	Arising basis
Interest 30 Sep 2025	£20,000	2025 (return year)	2025-26	Arising basis

What the example shows

The US return years are full of income the UK had not yet taxed. Claire's 2023 return reports £40,000 of interest with no UK tax paid that year to credit. Her 2024 return reports a $139,200 capital gain and £20,000 of interest that the UK left untaxed until December 2025. The full US tax on those items is due with the streamlined submission, plus statutory interest. No foreign tax credit is available in those years, because no UK tax was paid or accrued on them in those years.

The dollar gain is not the sterling gain. The UK computed a £120,000 gain in pounds. The US gain is computed by converting cost at the purchase-date rate and proceeds at the sale-date rate. Here that gives $139,200, which is lower than £120,000 converted at the sale-date rate ($151,200) because sterling weakened between purchase and sale. With rates moving the other way, the US gain can be larger than the sterling gain implies, or there can be a US gain on a UK loss. The UK computation cannot simply be converted at a single rate.

The UK tax arrives years later, on a different event. The £28,800 TRF charge falls in UK 2025-26 and is payable through the 2025-26 Self Assessment return. It relates to income that the US taxed in calendar years 2021 to 2024. Two separate questions follow. First, whether a TRF charge is a creditable foreign income tax at all. We are not aware of any IRS guidance that settles this, so treat it as unsettled. Second, if it is creditable, which US year and income category it belongs to. Neither question changes what goes on the 2023, 2024 and 2025 returns now. Those returns are prepared on the basis of UK tax actually paid or accrued for those years.

Even the arising-basis years do not line up neatly. UK tax on the September 2024 interest is tax for UK 2024-25, normally settled by the 31 January 2026 balancing payment. A cash-basis US taxpayer claims credit for foreign tax in the year it is paid. An individual who has elected to claim credits on the accrual basis generally accrues UK tax at the end of the UK tax year, on 5 April. Either way, UK tax on income received in the second half of a calendar year tends to fall into the following US year. Where you have carryback and carryforward capacity, the passive category foreign tax credit limitation and its carryover rules usually absorb that mismatch. But they have to be modelled, not assumed.

The foreign tax credit timing gap when UK tax comes later

For remittance-basis years, the timing gap is structural, not a rounding issue. US tax is due in the year the income arises. UK tax, if it is ever due, arrives in the year of remittance, and sometimes at a special rate under the TRF. The two can be separated by several years. The streamlined returns are prepared as at today, using the foreign taxes actually paid or accrued for each covered year.

When UK tax is later paid that relates back to an earlier US year, the question becomes whether and how to claim it against that year. That involves the foreign tax redetermination rules in section 905(c) and the extended period for foreign tax credit refund claims. We cover those mechanics in our separate guide to section 905(c) foreign tax redeterminations, so we do not repeat them here. For a streamlined case, the practical point is this. The submission should record which covered-year income is still exposed to future UK tax on remittance, so that any later credit claim can be traced to the right year and category. UK tax paid in a later year on remittances generally cannot be used to reduce the tax due with the streamlined filing now.

Credits are claimed on Form 1116. Offshore bank interest and investment gains normally fall in the passive category. A separate limitation applies to each category, and excess credits can be carried back one year and forward ten. Where UK tax on wages in the general category is high, it cannot shelter US tax on unremitted passive income. This is one of the main reasons streamlined bills for former remittance-basis users are larger than clients expect.

How was the remittance basis charge treated for US credit purposes?

Here a primary source does give an answer, though a conditional one. Long-term non-domiciled residents who claimed the remittance basis paid an annual remittance basis charge. Revenue Ruling 2011-19 addressed the £30,000 charge that applied to individuals resident in at least seven of the previous nine UK tax years. The IRS held that the remittance basis, combined with the charge, forms a single levy whose predominant character is that of an income tax, so a credit is allowable under section 901.

The ruling attaches limits that matter for a catch-up:

• Other credit requirements still apply. The ruling says a credit is available only if the other legal requirements are met. It cites the rule that a payment is a compulsory payment of tax only to the extent that UK elective provisions are applied so as to reduce, over time, the taxpayer's reasonably expected UK liability. Where paying the charge was not the lower-tax option over time, part of it may not be creditable. Answering that requires the UK computations for both bases.
• Reliance is tied to the UK law described. The ruling states that it cannot be relied on if the relevant UK provisions have been materially amended, and that the taxpayer is responsible for working out whether that has happened. The ruling describes the £30,000 charge. Higher charges were later introduced for longer-resident individuals. We are not aware of an IRS or HMRC primary source confirming that the ruling extends to those higher charges, so treat that question as unsettled.
• Allocation is not addressed. The ruling does not say how the charge, which is computed on nominated but unremitted foreign income or gains, is allocated between income categories or matched to specific US income on Form 1116. Nor does it address how later changes to the foreign tax credit regulations interact with it. We do not assert an answer on either point. Each needs a documented position on the return.

Few clients in the current streamlined window will have paid the charge in a covered year. By 2023 and 2024, many long-term residents had already been deemed UK domiciled and lost access to the remittance basis. But it does arise. Where it does, the nomination schedule from the UK return is a core record. HMRC's computation identified specific nominated income or gains, and those items carry a different UK status when later remitted.

What the UK side says now: FIG regime and TRF

From 6 April 2025, all UK residents are taxed on the arising basis. Qualifying new arrivals, meaning those returning after at least ten consecutive years of non-residence, can claim four years of relief on foreign income and gains under the FIG regime. HMRC's manual at RDRM76100 confirms that FIG relief cannot be claimed on foreign income and gains that arose before 6 April 2025 while the individual was on the remittance basis. Those amounts are taxed when remitted, either at normal rates or, where they are qualifying overseas capital and designated, under the TRF. The FIG regime manual sets out the new rules.

For US preparation, three points follow:

• Pre-April 2025 unremitted income has not disappeared on the UK side. It is still exposed to UK tax on remittance. Records of it therefore matter for future US credit claims as well as for the UK.
• A FIG regime claim from 2025-26 does not exempt anything for US purposes. Foreign income relieved under the FIG regime is still US income in the year it arises, and no UK tax is available to credit against it.
• If UK remittance-basis claims themselves were late or missing, that is a UK compliance question with its own deadlines. See our guide to the remittance basis claim time limit for late UK returns.

What must the streamlined pack contain for remittance-basis years?

The standard streamlined components are the same for everyone: three years of complete US returns with all required information returns, six years of FBARs, Form 14653, and payment of tax and interest. What changes for former remittance-basis users is the evidence behind the figures. These are the elements we build for each case.

The returns: unremitted income computed in dollars

Each covered return reports all foreign interest, dividends and gains in full, regardless of UK remittance status. Gains on securities need dollar cost basis at acquisition-date rates, which often means going back to statements from before the client arrived in the UK. Currency conversions of foreign-currency cash balances can produce separate US foreign currency gains or losses. Funds held in offshore accounts that are non-US pooled investment vehicles may also bring passive foreign investment company reporting into scope. These items are invisible in a UK remittance-basis computation and are frequently the largest numbers on the US return.

Information returns: FBAR and Form 8938 for the accounts that held the money

The accounts used to keep income offshore are, by definition, foreign financial accounts. Every account that held unremitted funds at any point in the six FBAR years must be reported on the FBAR if the aggregate maximum value of all foreign accounts exceeded $10,000. That includes accounts since closed, and accounts set up only to keep clean capital separate. For the three return years, the same accounts, together with other specified foreign financial assets, are usually reportable on Form 8938 where the value thresholds for taxpayers living abroad are exceeded. A missing 8938 can keep the assessment period open, so it is not a formality. Before you file, the FBAR penalty calculator can help frame the exposure you are resolving.

Form 14653: a narrative that fits the facts

The non-wilfulness certification must give specific reasons for the failures. A good-faith belief that offshore income left untaxed under a UK remittance basis claim was not reportable to the US is a recognisable pattern. It still has to be stated factually and consistently with the documents: who advised, what was understood, what was filed in the UK, and when the error was discovered. A generic statement is weaker than one anchored in the actual UK filings.

Original checklist: records the pack needs for each remittance-basis year

• UK Self Assessment returns and computations for each remittance-basis year, including the SA109 residence pages and any remittance basis charge nomination schedule.
• Full-year statements for every offshore account that held unremitted income, gains or clean capital, covering all six FBAR years, including closing statements for accounts since closed.
• The mixed fund analysis or account segregation map used for UK purposes, showing which accounts held clean capital, income and gains, and transfers between them.
• Transaction-level records for every disposal: acquisition dates and costs, sale dates and proceeds, and corporate actions, so that gains can be recomputed in dollars.
• Exchange rate workings for each conversion, showing the rate source and the convention used (spot or yearly average) for each class of item.
• Records of every remittance, including date, amount, source account and its UK treatment (taxed at normal rates, previously taxed nominated income, or TRF designation), to support later US credit claims.
• Evidence of UK tax actually paid for each UK year, including balancing payments and payments on account, with dates, so that credits are placed in the correct US year.
• Maximum account values for each calendar year, in the account currency and in dollars, for FBAR and Form 8938.
• Fund documentation for any non-US pooled investments held in the offshore accounts.
• Day-count and abode evidence for the non-residency test year or years.

Common errors in remittance-basis catch-ups

• Converting UK remittance-basis computations into dollars as the US figures. Those computations leave out exactly the income the US return most needs.
• Claiming a US credit in a covered year for UK tax that was only paid later on a remittance or TRF designation.
• Omitting accounts that held only clean capital from the FBARs. Reporting depends on the account and its value, not on what it was used for under UK rules.
• Treating a sterling gain as the US gain without recomputing it.
• Sheltering passive-category US tax with general-category UK tax on employment income.
• Asserting a position on the higher remittance basis charges, or on TRF creditability, as if it were settled, without disclosing the basis for it.

How we prepare these cases

At Jungle Tax, we treat a former remittance-basis client's streamlined filing as two reconciled sets of books. One is the US income ledger by calendar year. The other is the UK ledger by tax year and remittance event. The covered returns, FBARs and Form 14653 come out of the first. The second records which US-taxed income may later carry UK tax, so that future credit claims are supported. Our US-UK tax accountants prepare both sides together, which is where generalist preparers most often go wrong. For larger portfolios and multi-account histories, our high-net-worth practice handles the reconstruction work.

If you claimed the UK remittance basis and your US filings for those years are incomplete, a structured catch-up now is far easier to manage than a compliance letter later. To arrange a confidential review of your remittance-basis years and a costed streamlined plan, contact our cross-border team.