RDRM74600 - Temporary repatriation facility: Scope of designation: Foreign employment income received on or after 6 April 2025
Source: gov.uk (2025-04-07)


Under the temporary repatriation facility (TRF) it is not possible to designate foreign income and gains that have not arisen before 6 April 2025. However, in the case of employment income which is taxable on remittance, an individual may receive amounts on or after 6 April 2025 that relate to an earlier year when they were subject to the remittance basis. Employment income which relates to a tax year ending prior to 6 April 2025 in which the employee was subject to the remittance basis will continue to be taxable on remittance even if received on after 6 April 2025.

It is therefore possible for an individual to designate amounts of foreign employment income that were earned before 6 April 2025 and which are taxable on remittance, that were received on or after this date, providing they are received during the TRF period. This means the employment income must be received before 6 April 2028. The foreign employment income must meet the definition of ‘qualifying overseas capital’ (see RDRM72100 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72100)) to be eligible for designation.

A designation cannot be made before the year in which the employment income is actually received. This means that a designation cannot be made in anticipation or expectation of receiving certain income that was earned before 6 April 2025, even if it is expected to be received before 6 April 2028.

Example

Carlos is UK resident and a former remittance basis user. He arrived in the UK for the first time on 6 April 2022 and was UK resident for 2022-23. Carlos was subject to the remittance basis in each of his first 3 years of residence and was eligible for Overseas Workday Relief (OWR) during each of these years.

Carlos performed 60% of his duties in the UK and 40% overseas in each of the first 3 years of residence.

On 1 January 2023 Carlos is granted two share options in his employer’s company. The first is a 3-year option which cannot be exercised until 1 January 2026 and so will vest on that date. The second is a 6-year option which is due to vest on 1 January 2029.

Carlos is also typically paid a bonus on 1 January every year which relates to work completed in the prior calendar year.

On 1 January 2026 Carlos exercises the first share option and purchases shares in his employer’s company, triggering a chargeable event. Carlos also receives his bonus for the 2025 calendar year part of which is for the period from 1 January to 5 April 2025 when he was subject to the remittance basis.

As Carlos’ company shares are listed on the London Stock Exchange, they are deemed to be remitted immediately to the UK. Carlos’ bonus is paid into an overseas account and is yet to be remitted.

Although both the chargeable event and the bonus payment took place after 6 April 2025, Carlos will be able to make a designation under the TRF in respect of the portion of both his employment-related securities income and his general earnings bonus which relates to any part of the relevant period in which he was subject to the remittance basis. This is because they relate to non-UK duties completed during a year in which he was subject to the remittance basis. Carlos will need to designate the employment-related securities income in his 2025-26 tax return due to the deemed remittance on 1 January 2026, but he can designate the general earnings bonus in a later year of the TRF period if he chooses.

On 1 January 2029 Carlos’ second option vests which he exercises resulting in his shares immediately being deemed to have been remitted to the UK. In this case since the TRF period has ended, Carlos will not be able to make a designation. Even though he knew before and during the TRF period that his share option was due to vest, Carlos could not have designated this employment-related securities income before 1 January 2029.