RDRM35220 - Remittance Basis: Amounts Remitted: Mixed Funds: Remittances from mixed funds - definition of 'mixed fund'
Source: gov.uk (2025-04-07)


Overview (#Overview)

Definition (#Definition)

Multiple accounts (#Multiple accounts)

Overview

A mixed fund is an overseas fund of money, other property, or both, which contains or consists of more than one type of income, gains or capital, or income, gains or capital from more than one tax year.

Although the rules refer to a ‘fund’ the legislation is not limited to something as simple as a bank account. A mixed fund might be an asset, for example a painting or other such property that derives from foreign income or gains (refer to RDRM33150 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33150) Condition B - remittances derived from income or gains). This is regarded as containing the foreign income and gains that were used to purchase the property, and so is taxable in the same way as that foreign income or gains (section 809R(2) ITA 2007).

Definition

Section 809Q(6) Income Tax Act 2007

For the purposes of determining whether there has been a remittance from a mixed fund, where Condition A within section 809L ITA 2007 applies, the definition of a mixed fund is money or other property which, immediately before the transfer (as referred to in section 809Q(1)), contains or derives from either:

more than one of the kinds of income and capital mentioned in section 809Q(4),

income or capital for more than one tax year

TRF capital (see RDRM75100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm75100)) and another kind of income or capital

The kinds of income and capital mentioned in section 809Q(4), which includes gains, are set out at RDRM35240 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35240) under ‘Step 1’.

The words ‘immediately before the transfer’ are important. Once all of the foreign income and gains in the fund have been identified (using the Steps in section 809Q(3) – see RDRM35240 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35240)) as remitted by a relevant person, unless additional amounts of income and gains are credited to the mixed fund, the next transfer of funds will be capital. Transfers out of a mixed fund, whether these are remittances or offshore transfers, are on a transaction-by-transaction basis, unless the temporary annualised basis applies between 6 April 2025 and 5 April 2028 under the temporary repatriation facility (TRF) (see RD (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm75500)RM75500 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm75500)), or the special mixed fund rules applied before 6 April 2025 (see RDRM35810 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35810)).

This means that mixed funds include:

an asset (property) that is, or is acquired with or otherwise derives from the foreign income or gains

assets acquired using mixed funds - for example, houses, cars, works of art and shares in companies

an overseas account that was set-up using funds from money or property that is or was a mixed fund

an overseas account that includes more than one of the kinds of income or capital mentioned at section 809Q(4)

Multiple accounts

A mixed fund does not exist just because the individual has several accounts with the same banking institution, if each account is separately constituted and contains only one of the relevant types of income or capital from only one year. This will usually include bank accounts set up as sub-accounts under an ‘umbrella’ agreement.

Where an individual has used foreign income or gains as collateral for a loan, which is a relevant debt, and the income or gains ‘used’ are contained within more than one account or asset, see RDRM35270 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35270).

If income and capital sources from a tax year are maintained separately (sometimes referred to as ‘kept clean’ or ‘clean capital’) no mixed fund is created, and so these rules will not apply.

For example, an individual maintains 3 separate accounts with the same offshore institution:

account A into which they pay their relevant foreign earnings for the tax year

account B into which they pay some inherited money (clean capital)

account C into which they pay some relevant foreign income for the tax year

As long as these accounts do not become mixed funds, the individual can bring money into the UK from Account B and that will be accepted as a being a transfer of ‘clean’ capital, and so will not be a taxable remittance.

However, this may not be the case where individuals have remitted any nominated income and gains which created a remittance basis charge and the ordering rules at section 809J ITA 2007 apply – refer to RDRM3511 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35110)0 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35110).