Temporary Repatriation Facility - Abolition of the Remittance Basis
- lukeshergold
- 16 hours ago
- 2 min read
Temporary Workplace - Detached Duty Relief (DDR)
The UK tax system is undergoing significant changes with the abolition of the remittance basis from the 2025/26 tax year. One of the key transitional measures introduced is the Temporary Repatriation Facility (TRF), designed to encourage former remittance basis users to bring their unremitted foreign income and gains into the UK.
Abolition of the Remittance Basis:
From 6 April 2025, the remittance basis will no longer apply to foreign income and gains arising on or after this date. However, the remittance basis rules will still apply to unremitted foreign income and gains arising before this date but remitted later.
Introduction of the Temporary Repatriation Facility (TRF):
The TRF is a transitional relief available from 6 April 2025 to 5 April 2028. It allows individuals who were remittance basis users before 6 April 2025 to designate their unremitted foreign income and gains as at 5 April 2025 and pay a lower flat rate of UK tax on these amounts. This designated income and gains can then be remitted to the UK at any time without incurring further UK tax.
Tax Rates under the TRF:
The TRF applies a flat rate of UK tax on the designated amounts:
12% for the tax years 2025/26 and 2026/27.
15% for the tax year 2027/28
Eligibility Criteria for the TRF:
To qualify for the TRF, the individual must:
Have been a remittance basis user for any tax year before 2025/26.
Be UK resident in the relevant tax year when using the TRF
Implications for Business Investment Relief:
The TRF also impacts business investment relief. Any pre-6 April 2025 unremitted foreign income and gains that have not been designated for the TRF can be sheltered under business investment relief from 6 April 2025 to 5 April 2028. No new investments (including reinvestments) can be made under business investment relief on or after 6 April 2028.
Summary
The TRF is a significant measure aimed at facilitating the transition from the remittance basis to the new tax regime. It provides an opportunity for former remittance basis users to regularise their tax affairs with a reduced tax burden, encouraging the repatriation of foreign income and gains to the UK.
If you would like a free 30 Minute Tax Consultation please feel free to book in via the following link:
Kommentare