RDRM72300 - Temporary repatriation facility: Qualifying overseas capital: Uncertain amounts
Source: gov.uk (2025-04-07)


Paragraph 2(8) Schedule 10 Finance Act 2025

Former remittance basis users may have amounts overseas where they are uncertain as to the source of the funds, which could be pre-6 April 2025 foreign income or gains, or something else. These amounts can meet the definition of qualifying overseas capital under the temporary repatriation facility (TRF) at paragraph 2(8).

Where an amount is known to be foreign income or gains, which arose prior to 6 April 2025 in a year the individual was subject to the remittance basis, RDRM72200 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72200) explains how these may meet the definition of qualifying overseas capital.

However, if an amount of capital does not meet the criteria to be qualifying overseas capital outlined in RDRM72200 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72200) it may still be qualifying overseas capital if it was held by an individual immediately before 6 April 2025, and for the whole period the individual held it, after most recently acquiring it, it was situated outside the UK.

Although paragraph 2(8) does not require an individual to be uncertain of the source, if an amount is known to be pre-6 April 2025 foreign income and gains subject to the remittance basis it will likely be qualifying overseas capital under paragraph 2(2) or (5), and if it is known to be clean capital then an individual will have no need to designate it because no charge to tax arises on the remittance of amounts of clean capital.

See ‘Designation of uncertain amounts’ in RDRM73500 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73500) for an example of how amounts that are qualifying overseas capital under paragraph 2(8) can be designated.

Example

Veron is UK resident and a former remittance basis user. On 6 April 2025 Veron has an overseas bank account from which she has never made remittances to the UK. The account contains £500,000 but Veron has not kept records as to the source of all of these funds, although she can show that £300,000 is foreign dividend income from a year when she was subject to the remittance basis, and that £80,000 was a gift from her mother.

Veron is uncertain of the source of the remaining £120,000, but believes it is possible that some or all of it could be pre-6 April 2025 foreign income or gains from years when she was subject to the remittance basis, and she believes that £20,000 could be from an inheritance, but she has no evidence to support her belief.

Because the £120,000 was held by Veron immediately before 6 April 2025, was situated continually offshore for the time she held it, and she is uncertain of the source (so that it cannot be qualifying overseas capital under the definitions that relate to foreign income and gains) this amount meets the definition of qualifying overseas capital under paragraph 2(8).

Therefore, Veron is able to designate the £120,000 under the TRF. Once she has designated this amount and paid the TRF charge, she can remit it in future without a further tax charge arising and without concern that this may otherwise have been a remittance of pre-6 April 2025 foreign income and gains on which a tax charge would be due.