RDRM73600 - Temporary repatriation facility: Designating qualifying overseas capital: Exemptions and reliefs from further tax charges
Source: gov.uk (2025-04-07)


Exemptions from further Income Tax charges (#Exemptions from further Income Tax charges)

Capital Gains Tax main exemption (#Capital Gains Tax main exemption)

Reliefs in respect of matched capital payments (#Reliefs in respect of matched capital payments)

Investment of designated qualifying overseas capital (#Investment of designated qualifying overseas capital)

Exemptions from further Income Tax charges

Paragraphs 10 and 11 Schedule 10 Finance Act 2025

When an amount of designated qualifying overseas capital is remitted on or after 6 April 2025, the amount is exempt from any Income Tax charges on that remittance.

Paragraph 10 also provides Income Tax relief for amounts matched to gains under paragraph 4 (offshore income gains) as these would otherwise be charged to Income Tax.

Paragraph 11 applies where an amount of income is treated as arising to an individual under section 732 ITA 2007 (transfer of assets abroad – benefits charge) that is exempt from a charge to Income Tax. It amends the step calculation at section 733(1) ITA 2007 in respect of these exempt amounts.

Capital Gains Tax main exemption

Paragraph 12 Schedule 10 Finance Act 2025

When an amount of designated qualifying overseas capital is remitted on or after 6 April 2025, the amount is exempt from any Capital Gains Tax charges on that remittance.

Reliefs in respect of matched capital payments

Paragraph 13 Schedule 10 Finance Act 2025

Paragraph 13 prevents a charge to both TRF and to CGT on the same payment.

Where an individual designates an amount of a capital payment as designated qualifying overseas capital because of it being matched to gains under paragraph 3 (section 87 and 89 TCGA 1992 cases) or 5 (Schedule 4C cases), the corresponding chargeable gains deemed to accrue as result of the payment are reduced by the designated amount.

Investment of designated qualifying overseas capital

Although designated qualifying overseas capital itself may be remitted to the UK without incurring further tax charges, the designated qualifying overseas capital may trigger further tax obligations if it is used in a way that generates income or capital gains that would be subject to taxation.

Example

Jean is a UK resident and former remittance basis user. On 6 April 2025 she has £40,000 of foreign income from 2024-25 in an overseas bank account.

On 31 January 2027 Jean designates the £40,000 in her Self Assessment tax return for 2025-26 and pays the TRF charge of £4,800 (12% of £40,000). She chooses not to remit the designated qualifying overseas capital.

On 6 April 2027 Jean invests the £40,000 of designated qualifying overseas capital in an overseas stocks and shares portfolio. During the 2027-28 tax year the portfolio returns income of £5,000. This income is not exempt from further charge and is taxable on Jean at the usual Income Tax rate for 2027-28. It is also not capable of being designated because Jean can only designate amounts that arose before 6 April 2025 when she was subject to the remittance basis.