Temporary Repatriation Facility: The 12% Window Explained

The temporary repatriation facility lets former remittance basis users designate foreign income and gains that arose before 6 April 2025 and pay a flat UK charge of 12% for the 2025-26 and 2026-27 tax years, rising to 15% for 2027-28. Once designated, the money can be brought onshore without further UK tax.

For clients who have spent fifteen years running two balance sheets — a UK spending account and an offshore pot that could never be touched — this is the cleanest exit that has been offered since the remittance basis was introduced. It is also finite. The 12% rate applies to two tax years only. After that the price of the same decision rises by a quarter in relative terms, and when the window closes the old remittance rules bite again at marginal rates that can reach 45% on income and 24% on residential property gains.

This guide is written for the people who actually have to make the call: individuals with seven- and eight-figure unremitted pots, trustees holding pre-2025 stockpiled gains, and the American former non-doms who face the ugliest version of the arithmetic. It covers how to size a designation, how to sequence it across the three available years, how to evidence it so it survives an HMRC enquiry, and the specific circumstances in which paying 12% early beats waiting.

What is the temporary repatriation facility?

The remittance basis of taxation was abolished with effect from 6 April 2025 and replaced with a residence-based four-year foreign income and gains regime for new arrivals. That change created an obvious problem: decades of foreign income and gains sitting offshore, permanently taxable on remittance under the old rules, with no route to the UK short of a top-rate charge.

The temporary repatriation facility (TRF) is the transitional answer. It allows an individual who was taxed on the remittance basis in an earlier tax year to make a formal designation of a specified amount of qualifying overseas capital, pay a flat-rate charge on that amount, and then remit the designated sum to the UK free of any further income tax or capital gains tax — whenever they choose, including after the facility itself has closed.

Three features make it materially different from anything that came before:

• The charge is flat, not marginal. It does not stack with other income, does not interact with the personal allowance taper, and is not affected by the size of the designation.
• Designation and remittance are decoupled. You can designate in 2025-26 and leave the money offshore for a decade. The tax character is fixed at the point of designation, not the point of transfer.
• Designated amounts jump the queue. The ordinary mixed fund ordering rules, which force the most heavily taxed element out of an account first, are overridden so that designated capital is treated as remitted ahead of everything else.

That third point is the one advisers underrate. A great deal of the historic pain of the remittance basis came not from the rate but from the ordering: clients could not touch an account without dragging out the worst-taxed layer. Designation cleans a defined slice of the account and moves it to the front of the queue.

How long does the 12% rate last, and what happens next?

The facility runs for three tax years. The rate is not constant across them, which is the entire planning point.

Tax year	Designation rate	Practical deadline for designation	Cost per £1m designated
2025-26	12%	Self assessment return for 2025-26	£120,000
2026-27	12%	Self assessment return for 2026-27	£120,000
2027-28	15%	Self assessment return for 2027-28	£150,000
2028-29 onwards	Facility closed	—	Marginal rates on remittance

On a £5m unremitted pot, the difference between designating at 12% and designating at 15% is £150,000. That is not a rounding error, but nor is it always decisive — the three-point step matters most when set against what the money would otherwise earn, and against the risk that the client's circumstances change before 2027-28.

Is it ever right to wait for the 15% year?

Yes, in four situations we see regularly:

• Liquidity is genuinely constrained. The charge is payable in cash through self assessment on the ordinary due date. Designating £10m in 2025-26 creates a £1.2m cash liability by 31 January 2027 whether or not a penny has been remitted. If realising the assets to fund the charge triggers a larger gain elsewhere, deferral can be cheaper than the three-point saving.
• The composition of the fund is still unresolved. Designating the wrong amount, or designating capital that was never taxable in the first place, is a permanent waste. A well-documented designation in 2027-28 beats a guessed one in 2025-26.
• Trust distributions are expected later in the window. Where offshore trust benefits will be received in a later TRF year, the designation has to follow the receipt.
• Residence is uncertain. A client seriously contemplating leaving the UK may find that the facility is not the right tool at all, and that the older analysis — remain non-resident, remit later — still wins.

Against that, waiting has a hard cost beyond the rate. Every year of delay is another year of investment returns generated inside a fund the client cannot use, and another year of the compliance overhead that comes with segregating accounts.

Who can use the temporary repatriation facility?

The facility is aimed at individuals who were taxed on the remittance basis for at least one tax year before 2025-26. That includes people who claimed it formally on a return and those who were entitled to it automatically because their unremitted foreign income and gains were below the de minimis threshold.

Some points that come up constantly in client meetings:

• Actual or deemed domicile status before 6 April 2025 is not, by itself, the qualifying test — prior use of the remittance basis is.
• The facility is not confined to those who have already left the old regime. Individuals who become subject to the new residence-based rules can still designate historic amounts.
• Designation is made through the self assessment return for the relevant year, so a return is required even where no other UK liability arises.
• An amount cannot be designated twice, and amounts already remitted and taxed cannot be retrospectively cleaned.

Because eligibility turns on historic filing behaviour that may go back many years, the first task is almost always archaeological rather than analytical. We routinely reconstruct fifteen years of returns and bank records before advising a number. Our private client tax team treats that reconstruction as the deliverable in its own right.

What can actually be designated?

Broadly, qualifying overseas capital means pre-6 April 2025 foreign income and gains that arose to the individual while they were taxed on the remittance basis and that remain unremitted. In practice the pool includes:

• Foreign dividends, interest, rental profits and employment income relating to duties performed abroad;
• Realised gains on non-UK situs assets;
• Amounts standing in mixed funds where the foreign income and gains element cannot be cleanly separated;
• Income and gains that were previously unremittable because of exchange control or local blocking rules;
• Certain amounts received from offshore structures and matched to pre-April 2025 income and gains.

Where a mixed fund cannot be dissected, there is provision to designate an amount without a full forensic analysis — a pragmatic concession that is enormously valuable for clients with thirty-year-old accounts and incomplete records. The trade-off is that you may end up paying 12% on clean capital that would have been remittable free of charge. Whether that trade is worth making is an arithmetic question: if the analysis costs less than the tax on the clean element, do the analysis.

How do you size a designation?

We work through four steps:

• Identify the spending need. Not the whole pot — the amount the client will realistically bring onshore over the next ten to fifteen years for property, school fees, philanthropy and lifestyle.
• Add the structural need. Capital earmarked for UK-situs investment, funding a UK company, or settling a UK trust.
• Layer in the estate position. Under the residence-based inheritance tax rules, long-term UK residents face IHT on worldwide assets. Where the offshore pot will be exposed to IHT in any event, the case for cleaning it and deploying it during lifetime strengthens considerably. This is where the facility intersects with trust and estate structuring.
• Stress-test the residual. Anything left undesignated stays permanently tainted. Assume you will never remit it, and check that the client is comfortable with that.

The US overlay: why American former non-doms face a harder sum

US citizens and green card holders living in the UK are taxed by the IRS on worldwide income as it arises, regardless of where it sits. That produces a structural asymmetry that catches people out.

Issue	UK / HMRC treatment	US / IRS treatment
Pre-2025 foreign income and gains	Untaxed until remitted, unless designated	Already taxed in the year it arose
Act of remitting cash to the UK	Taxable event absent designation	Not a taxable event — no second charge
The designation charge itself	Flat-rate UK charge collected via self assessment	Creditability under the foreign tax credit rules is not free from doubt
Matching income for credit purposes	Not relevant	The underlying income arose in closed years, so there is often nothing in the current-year basket to credit against
Foreign exchange movements	Generally outside the charge on remittance	Currency gain on disposal of foreign currency can be separately taxable

The practical consequence: an American who designates £3m and pays £360,000 may well be paying that as an absolute cost with no US relief, because the income it relates to was reported to the IRS years ago and the credit rules require income in the right basket in the right year. The rules on creditability and on carryovers are set out in the IRS guidance on the foreign tax credit and in the instructions to Form 1116, and the analysis is genuinely technical rather than mechanical.

None of that makes designation wrong for Americans. It makes it a decision that must be modelled on both sides of the Atlantic simultaneously, which is exactly the work our cross-border tax planning team does. Where a client also has historic US filing gaps, that has to be resolved first — bringing a large sum onshore invites scrutiny in both jurisdictions, and the IRS streamlined filing procedures are the usual route to a clean slate before any designation is made.

Sequencing across the window

Most substantial clients should not designate everything in one year. A staged approach usually wins:

• Year one (2025-26): designate the tranche you are certain about — identifiable foreign income and gains in segregated accounts, sized to near-term spending. Lock the 12% rate on the uncontroversial portion.
• Year two (2026-27): designate the tranche that required forensic work, once the mixed fund analysis is complete and the records support it. Still 12%.
• Year three (2027-28): reserve for late-arising items — trust distributions received in that year, previously unremittable amounts that become accessible, and anything the earlier analysis missed. Accept 15% on a deliberately small residue.

Two constraints shape the sequence. First, the cash cost lands on the ordinary self assessment timetable, so a large year-one designation needs a funding plan and may affect payments on account. Second, designation is effectively a one-way door once the amendment window for the relevant return has closed, so certainty should be bought before rate savings are chased.

Evidencing a designation so it survives enquiry

HMRC has the same enquiry powers over a TRF designation as over any other return entry. The file we build for clients includes:

• A schedule of every non-UK account and asset held at 5 April 2025, with opening and closing balances;
• Evidence of remittance basis claims in prior years, cross-referenced to the returns in which they were made;
• A source analysis for each account, separating foreign income, foreign gains, clean capital and relevant person contributions;
• Contemporaneous bank statements and, where reconstruction was necessary, a written methodology explaining the assumptions;
• A board or trustee minute where offshore structures are involved;
• A memorandum recording why the designated figure was chosen — the single most useful document if the position is ever questioned.

HMRC's own technical material on the remittance rules sits in the Residence, Domicile and Remittance Basis Manual, and the annual remittance basis helpsheet remains the clearest published statement of how mixed funds and relevant persons are treated. Both are worth reading alongside any adviser memorandum.

Common mistakes we are already seeing

• Designating the account rather than the amount. The facility applies to a quantified sum of qualifying overseas capital, not to a bank account as a container.
• Ignoring relevant persons. Remittances by spouses, minor children and certain trusts and companies count. A designation sized only to the individual's own spending misses the family use of the funds.
• Forgetting the asset, not just the cash. Bringing a painting, a car or jewellery into the UK can be a remittance. Assets purchased with pre-2025 foreign income and gains deserve the same analysis as cash.
• Assuming business investment relief is redundant. It is not. For clients funding UK trading companies, relief may still deliver a better outcome than a 12% charge.
• Treating this as a UK-only decision. For US, EU and other treaty-connected clients, the domestic answer is only half the answer.

How this fits the wider 2025 reforms

The facility does not exist in isolation. It sits alongside the four-year foreign income and gains regime for new arrivals, capital gains rebasing for certain former remittance basis users, and the shift of inheritance tax from a domicile test to a long-term residence test. Decisions taken under one heading constrain the others: a client who designates heavily and remits into UK assets has increased their UK estate exposure at exactly the moment the IHT rules became residence-based.

The right sequence is therefore to model the estate position first, the income position second, and the designation last. Our high net worth advisory practice runs that model as a single exercise rather than three separate conversations, and further technical material is collected in our guides library.

The decision, in one paragraph

If you are a long-term UK resident with a meaningful unremitted pot, you will realistically bring some of it onshore in your lifetime, and you are not about to leave the UK, the facility is very likely worth using — and worth using at 12% rather than 15%. If your pot is small, your records are irretrievable, or your residence plans are genuinely open, the answer is less obvious and the cost of getting it wrong is a permanent, non-refundable payment. The window does not reopen.

Jungle Tax advises internationally mobile individuals, founders and families on exactly these decisions, on both sides of the US-UK border. If you are weighing a designation, we will model the cost against the alternatives, quantify the US position where relevant, and build the evidence file before anything is filed. To discuss your position in confidence, contact our cross-border team for a private consultation — ideally well before the return deadline for the year you intend to designate.