RDRM35210 - Remittance Basis: Amounts Remitted: Mixed Funds: Remittances from mixed funds - overview
Sections 809Q and 809R Income Tax Act 2007
A mixed fund is an overseas fund of money, other property, or both, which contains or consists of more than one type of income, gains or capital, or income, gains or capital from more than one tax year. A simple example would be a single offshore bank account which contains an individual’s relevant foreign earnings, interest (relevant foreign income) and some proceeds including a chargeable gain from the disposal of an asset.
From 6 April 2025 a mixed fund may also contain ‘TRF capital’, if an individual has designated amounts within a mixed fund under the temporary repatriation facility (TRF) - see RDRM75100.
Where Condition A of section 809L ITA 2007 applies (see RDRM33100), the mixed fund rules work to determine if Condition B is also met. They do this by applying ordering rules to the types of income, gains and capital in the fund and (for tax purposes) identifying property brought to the UK out of the fund with the fund’s contents in the same order. It can then be determined whether what is brought to the UK satisfies Condition B by virtue of being treated as (for instance) relevant foreign earnings.
The effect of these rules is that foreign income and gains of a taxpayer that are remitted to the UK under section 809L(2) and (3) from a mixed fund are remitted to the UK in a certain order – see RDRM35240 which explains how the ordering rules at section 809Q(3) operate.
There are other rules that determine what is regarded as ‘leaving’ a mixed fund as a result of an ‘offshore transfer’, for example, where money is spent outside the UK, or transferring money from a mixed fund to another offshore account – see RDRM35420 which explains how the offshore transfer rules at section 809R operate.
Although the principle behind the rules is relatively straightforward, their application requires detailed knowledge and accurate accounting showing precisely what has entered and left the fund, when and where, with complete details of all transfers where money leaves the mixed fund. This information is required in order to check any amounts remitted from mixed funds.
The mixed fund provisions do not apply to Condition C or Condition D in section 809L (see RDRM33200 and RDRM33400).
The mixed fund provisions also do not apply to foreign income or gains that arose or accrued before 6 April 2008 (see RDRM36000).