RDRM74400 - Temporary repatriation facility: Scope of designation: Exempt property
Source: gov.uk (2025-07-31)


Under the remittance basis rules contained within section 809L ITA 2007, property and assets that are purchased out of, or otherwise derive from foreign income and gains that are brought to, received or used in the UK by, or for the benefit of, a relevant person would constitute a taxable remittance (see RDRM33100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33100) (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33100)onwards).

The legislation provides several exceptions to this rule at section 809X ITA 2007 which enables certain property to be remitted to the UK without attracting a tax charge. Such property is known as ‘exempt property’ (see RDRM34070 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34070) for further guidance on what falls within this definition). If such an asset ceases to be exempt property (see RDRM34080 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34080)), or it is sold, and the proceeds are not taken offshore within a specified period, a taxable remittance will occur.

A designation under the temporary repatriation facility (TRF) can be made in respect of the foreign income or gains from which the exempt property derives.

A designation can be made whilst the property is still exempt so that if, in the future, the asset ceases to be exempt property, this will be a remittance of designated qualifying overseas capital and therefore no further UK tax will be payable.

A designation can also be made if, during the TRF period, the exempt property ceases to meet any of the exemption rules, or is sold, or converted into money whilst in the UK.

Example 1

Franck is UK resident and a former remittance basis user. In December 2025 he visits family in Paris and purchases a designer watch and bracelet for £14,000 using his foreign income from 2020-21 held in a French bank account. He gifts the jewellery to his wife, Veronica, once back in the UK.

As the watch and bracelet derive from Franck’s pre-6 April 2025 foreign income, bringing them to the UK would ordinarily result in a taxable remittance. However, as the watch and bracelet are owned by a relevant person (his spouse) and are for her own personal use, both items of jewellery are deemed to be exempt property under the personal use rule within section 809Z2 ITA 2007.

Franck has therefore not made a chargeable remittance. He is, however, still able to designate the foreign income that was used to purchase the jewellery. This is the case even if the jewellery currently still meets the definition of exempt property within section 809X ITA 2007.

Example 2

Isabella is UK resident and a former remittance basis user. On 6 April 2025 Isabella arranges for a valuable painting, which she had purchased at auction in Italy for £2m out of her foreign income from 2023-24, to be shipped to a specialist restoration studio in the UK for repair and cleaning.

As the painting derives from Isabella’s pre-6 April 2025 foreign income, bringing it to the UK would ordinarily result in a taxable remittance. However, because the painting meets the repair rule (see section 809Z3 ITA 2007), the painting is exempt property for as long as it meets the conditions and is not treated as remitted on 6 April 2025.

The restoration work is finished on 1 July 2025 and the painting is put into storage at the studio’s secure warehouse, in preparation for Isabella to arrange to ship the painting back to Italy, to keep at her apartment in Rome.

On 15 July 2025 Isabella decides to keep the painting at her London apartment and has it transported there instead. The painting therefore ceases to be exempt property on 15 July 2025, because it ceases to meet the repair rule and does not meet any other rules, resulting in a taxable remittance of the foreign income deriving from the painting. The painting is in Isabella's private residence so does not meet the public access rule (see RDRM34090 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34090)), and she has previously temporarily brought the painting to the UK so it does not meet the temporary importation rule (see RDRM34210 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34210)).

As Isabella is able to make designations under the TRF in 2025-26 she can designate the £2m, which means that she would pay the TRF charge of £240,000 (12% of £2m) instead of paying tax at the usual rates on the remittance. If Isabella wants to designate the £2m, she must do so in her 2025-26 tax return as this is the year that she remitted it.