As of 6 April 2025, the “Remittance Basis” rules that allowed non-domiciled individuals to elect not to be taxed on unremitted Foreign Income and Gains (FIG) ended. Alternative rules have been introduced under which new arrivals will have a shorter window, during which FIG proceeds can be exempt from UK taxation. Previous users of the remittance basis may consider the new rules less favourable, however, they have the option to utilise some transitionary rules should they choose to.
The new regime stipulates that new arrivals don’t pay tax on FIG for four years but can bring the proceeds into the UK.. Previous remittance basis users cannot remit their untaxed FIG without a charge. This detail highlights the importance of ensuring proceeds retained under the old remittance basis regime, continue to be tracked and segregated from capital or UK tax paid funds.
The future repatriation of untaxed FIG from the remittance basis years will continue to attract tax at that time, unless funds have been designated under the Temporary Repatriation Facility (TRF). Therefore, maintaining practices such as offshore custody, non-UK situs investing and income segregation remain just as important for such assets now as they did historically.
Temporary Repatriation Facility (TRF)
For individuals with untaxed FIG from the remittance basis years who may need or want to consider remitting such offshore income and gains into the UK, using the TRF could be advantageous. In this time-limited opportunity for remittance basis, individuals who accumulated offshore income and gains under the remittance basis before 6 April 2025 could see a significantly lower tax rate applied to these funds.
Under the TRF, an individual must “designate” funds and pay the relevant TRF charge as part of their self-assessment tax return. Assets designated under the TRF don’t need to be remitted to the UK immediately, but the facility to allow designation is only available for three years and the charge must be paid in the year of designation. For designated funds kept offshore, it’s important to consider ongoing segregation so that they are not mixed again in future.
Tax Rates Under the TRF:
- 12% in the tax year 2025–26
- 12% in the tax year 2026–27
- 15% in the tax year 2027–28
Rebasing to 5 April 2017
Individuals who have used the remittance basis can rebase assets to their market value on 5 April 2017. To take advantage of this, the asset must have been held since before 5 April 2017 and the individual must have remained non-domiciled (or deemed domiciled) until 6 April 2025.
We’re here to help
If you have any questions about the new rules or how to use the transitionary facilities as part of your financial planning, please get in touch with Nathan Prior or any of PWM’s specialist international advisers.
Nathan Prior
Partner, Head of PWM International
nprior@partnerswealthmanagement.co.uk
020 7444 4053
The information and/or any reference to specific instruments contained in this article does not constitute an investment recommendation or tax advice. The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns.