RDRM74800 - Temporary repatriation facility: Scope of designation: Transfer of assets abroad income
Source: gov.uk (2025-04-07)


The transfer of assets abroad legislation (ToAA) is a wide-ranging anti-avoidance provision aimed at preventing individuals who are resident in the UK from avoiding a liability to income tax by means of a transfer of assets which results in income becoming payable to a person abroad, whilst the individual who made the transfer has either the power to enjoy the income arising or is entitled to receive a capital sum connected with the transfer. In such circumstances the transferor will be taxable on the income arising to the person abroad in a tax year. This is known as the income charge.

Detailed guidance on the application of the ToAA provisions can be found in the International Manual at INTM600000 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm600000) onwards.

For each of the years up to and including 2024-25 if an individual was a remittance basis user and is subject to an income charge or benefits charge on foreign income under the ToAA provisions, that income would only be subject to tax in the UK to the extent that it was remitted to the UK in the year of receipt or any subsequent year. Guidance on how the remittance basis applied to such income can be found at IMTN601900 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601900).

Any individual who is eligible to use the temporary repatriation facility (TRF) and who has had unremitted pre-6 April 2025 foreign income that has arisen as a result of sections 720, 727 or 731 ITA 2007 which meets the definition of ‘qualifying overseas capital’ (see RDRM72200 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm72200)) can designate these amounts under the TRF and pay the TRF charge on the designated amounts in the year of designation.

Example 1

Jade is resident in the UK and a former remittance basis user. In 2014-15 Jade subscribed for shares in a newly incorporated Jersey company with £1 million. The company in turn used the £1 million to invest in overseas investments. The investments generated income of £75,000 per year from 2014-15 onwards. This arrangement comes within section 720, however as Jade is a former remittance basis user she will only be subject to tax on the £75,000 each year to the extent that the amounts are remitted to the UK.

In the years from 2014-15 to 2024-25 none of this income, totalling £750,000, has been remitted to the UK. From the year 2025-26 the remittance basis of taxation will no longer apply to the income of the Jersey company and Jade will be assessable on the income of £75,000 under section 720 in each year going forward. Jade will have £750,000 of unremitted income as at 5 April 2025 and she could elect to designate this amount, as it would be qualifying overseas capital, under the TRF and pay the TRF charge, in whichever year of the TRF period she chooses to. If Jade did this, she would be free to bring the designated amount to the UK without any further tax charge.

Example 2

Steven is resident in the UK and a former remittance basis user. In 2017 he settled a discretionary trust in Guernsey for the benefit of his two adult children Charlotte and James, who are also former remittance basis users. Steven is excluded from benefiting from the trust. The trust made overseas investments which yielded income of £100,000 per year.

In 2020-21 the trustees made a capital distribution to James of £150,000 which James used to make personal investments overseas. In 2022-23 the trustees made a capital distribution to Charlotte of £200,000 which she retained in an overseas bank account.

There is sufficient relevant income within the trust to match to both distributions made to James and Charlotte under section 733 ITA 2007, so income of £150,000 is treated as arising to James in 2020-21 and £200,000 is treated as arising to Charlotte in 2022-23. However, as they are both remittance basis users this income is not chargeable to tax unless they remit it to the UK.

As of 6 April 2025, neither James nor Charlotte have remitted the income to the UK and so from this date James could designate the £150,000 under the TRF and Charlotte could designate the £200,000 under the TRF. The amounts would be qualifying overseas capital which they could designate under the TRF, and if they designated the amounts, they would pay the TRF charge on designation. If they did this, they could bring the designated amounts to the UK without it being treated as a taxable remittance of foreign income.

Example 3

Andrew is a former remittance basis user and has been resident in the UK since 2015. In March 2017 Andrew settled £1.5 million into a Liechtenstein trust, the A Trust. The A Trust is a discretionary trust of which Andrew is a beneficiary. The A Trust incorporated a BVI company, company A, and made a loan of £1.5 million to the company. Company A invested £1.5 million in overseas investments, which generated income of £150,000 per year.

As Andrew was non-UK domiciled and a remittance basis user when he settled the trust, and the trust received only foreign source income for the years 2024-25 this will be treated as protected foreign source income and section 720 will not apply. Instead, Andrew will be subject to section 731 (the benefits charge) to the extent that he receives benefits from the trust that are matched with the protected foreign source income. For further details of this charge see INTM603180 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm603180).

Andrew received a capital distribution of £400,000 from the trustees in 2023-24 which is matched with protected foreign source income of the trust and so if Andrew remits this benefit to the UK, he will be taxable on the benefit received in the year it is remitted. As at 2025-26 Andrew has not remitted the benefit to the UK. Andrew can designate this £400,000 at any time during the TRF period. Andrew decides to designate the amount in 2026-27, which he does in his Self Assessment tax return and pays the TRF charge. He is able to bring the amount to the UK without it being treated as a taxable remittance, so no further tax will be payable.