RDRM73310 - Temporary repatriation facility: Designating qualifying overseas capital: Designation process: Making a designation
Source: gov.uk (2025-06-06)


Overview (#Overview)

Format of designation (#Format of designation)

Effect of designation (#Effect of designation)

Exchange rates (#Exchange rates)

Who can make a designation (#Who can make a designation)

Record keeping (#Record keeping)

Overview

Paragraph 8 Schedule 10 Finance Act 2025

During the temporary repatriation facility (TRF) period, individuals will be able to make an election in which they can designate an amount of qualifying overseas capital which will then be taxed at a reduced rate. For a definition of ‘qualifying overseas capital’ see RDRM72100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72100) onwards. See RDRM73400 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73400) for details of the TRF charge and the reduced rates that apply to each year of the TRF period.

Format of designation

A designation election must be made in an individual’s Self Assessment tax return.

A designation must both:
- set out the total amount designated
- identify which (if any) of the amounts designated have been remitted in the tax year to which the return relates
As all funds designated under the TRF will be charged at flat rate there is no requirement to report foreign income and foreign gains separately.

See RDRM73320 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73320) for the relevant time limits for designation elections.

See RDRM73340 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73340) for how amounts that have been subject to a foreign tax should be calculated for designation purposes.

Effect of designation

Any designated qualifying overseas capital will be separate from the rest of an individual’s tax calculation and will not form part of an individual’s total taxable income or gains. Therefore, a designation will have no impact on an individual’s adjusted net income (ANI) calculation or any of their bands and rates.

It will not be possible to claim that designated qualifying overseas capital forms part of a person’s net, threshold or adjusted income for pension purposes.

The designation will also not impact an individual’s payments on account due for the following year.

Exchange rates

Foreign income which is taxed on the remittance basis is translated into pounds sterling at the exchange rate prevailing on the date of remittance. As an individual is not required to remit funds in order to designate them, the exchange rate prevailing on the date of designation should be used. A designation is treated as having taken place at the beginning of the tax year, so the exchange rate prevailing on 6 April in the tax year for which the designation is being made should be used.

Foreign chargeable gains taxed on the remittance basis are calculated using sterling translations at the date of acquisition and the date of disposal. So, the consideration received will be translated into sterling using the exchange rate on the date of disposal, and allowable deductions will be translated using the exchange rate(s) on the date(s) the expenditure, for example acquisition costs, are incurred. The same applies for foreign gains designated under the TRF, so that the gain will be denoted in pounds sterling at the time the asset is disposed of, not at the time the gain is designated.

Where an individual is uncertain as to the source of an amount that they are designating (see RDRM72300 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72300)) the exchange rate prevailing on the date of designation should be used.

General guidance on exchange rates for tax purposes can be found at BIM39515 (https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim39515).

Who can make a designation

A designation under the TRF must be made by an individual that would be chargeable were the foreign income and gains to be remitted – see RDRM73200 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73200), which also sets out the eligibility criteria for using the TRF.

This does not prevent a person, such as an advisor, assisting an individual in the managing of their tax affairs by completing a return or making a payment.

Record keeping

Individuals will be required to keep their own records of the designated qualifying overseas capital on which the TRF charge has been paid, whether it is within a mixed fund or in an account or asset containing just designated overseas capital. Individuals will not be required to submit these records to HMRC, unless they are needed as part of a compliance check.

It is possible for individuals to make partial designations, or to designate some but not all foreign income and gains within a mixed fund. Any foreign income and gains which are not designated under the TRF will be taxed on remittance in accordance with the existing rules. Therefore, where an individual has designated amounts of pre-6 April 2025 foreign income and gains, they will need to maintain clear records to demonstrate that any remittances are of designated qualifying overseas capital rather than pre-6 April 2025 foreign income or gains on which no designation has been made.

Because it is possible, on or after 6 April 2025, for a tax charge to arise on the remittance of foreign income and gains that arose before the 2025-26 tax year for former remittance basis users, they may need to retain records of their foreign income and gains for longer than an individual who has always been taxed on the arising basis.