RDRM76200 - Temporary repatriation facility: Interaction with other rules and regimes: Temporary non-residence and the TRF
Foreign income and gains treated as arising on or after 6 April 2025
Pre-6 April 2025 foreign income and gains treated as remitted on or after 6 April 2025
When an individual returns to the UK after a period of temporary non-residence, they may be charged to tax on foreign income and gains that arose, or were remitted to the UK, during the period spent outside the UK, under the temporary non-residence rules. See RFIG21510 onwards for guidance on when an individual is regarded as temporarily non-resident.
If an individual is subject to the remittance basis before the period of non-residence and remits pre-6 April 2025 relevant foreign income (see RDRM31140 for a definition of ‘relevant foreign income’) to the UK whilst temporarily non-resident, they are treated as having remitted their relevant foreign income to the UK in the tax year of their return - see RDRM32510.
Foreign income and gains treated as arising on or after 6 April 2025
From 6 April 2025, any foreign income and gains which have arisen during a period of non-residence and become chargeable to an individual on their return to the UK due to the temporary non-residence rules cannot be designated under the temporary repatriation facility (TRF). This is because the remittance basis of assessment is not available in the year an individual returns to the UK after 6 April 2025, so any income and gains treated as arising in the year of return will be taxed on the arising basis and subject to tax at the usual tax rates in the year of return.
Example 1
Jacek first came to the UK on 6 April 2014 and had been UK resident and subject to the remittance basis for all tax years from 2014-15 to 2022-23. He has been receiving annual dividends from a Slovenian company which would be classed as close if it was resident in the UK. He has been keeping his pre-6 April 2025 foreign dividend income in a Slovenian bank account.
On 6 April 2023 Jacek left the UK to live in Denmark and was non-resident for the 2023-24 and 2024-25 tax years. He continued to receive his annual dividends during the 2 years he was non-resident, receiving £150,000 in 2023-24 and £75,000 in 2024-25.
On 6 April 2025 Jacek returns to the UK and is UK resident in the 2025-26 tax year.
Because Jacek has been UK resident for 4 out of the prior 7 years before his departure and since his period of non-residence was under 5 years, Jacek is subject to the temporary non-resident rules. As a result, instead of arising during the period in which Jacek was not UK resident, the foreign dividend income he received in 2023-24 and 2024-25 is deemed to arise in 2025-26 (the year of his return to the UK).
As the remittance basis of taxation is no longer available from 6 April 2025, and the foreign dividend income he received whilst non-resident is deemed to arise in the 2025-26 tax year, it is not be possible for Jacek to claim the remittance basis in relation to this income, even though he received it in a year in which Jacek may have been able to claim the remittance basis had he been UK resident.
Jacek cannot designate the £225,000 under the TRF as an alternative to being taxed on the arising basis, since this income is deemed to have arisen in a period after he was able to claim the remittance basis. This is the case whether he brings the foreign income to the UK or keeps it offshore. However, Jacek can designate any amounts of unremitted foreign dividend income that arose in an earlier year when he was subject to the remittance basis.
Pre-6 April 2025 foreign income and gains treated as remitted on or after 6 April 2025
Individuals who return to the UK during the TRF period are able to designate foreign income and gains that arose prior to their departure from the UK in a year when they were subject to the remittance basis. This can include amounts that were remitted during the period they were temporarily non-resident and treated as remitted on return, or that remain unremitted. An individual must be UK resident to designate under the TRF, so individuals who are temporarily non-resident cannot make a designation election until their year of return to the UK, even if they are anticipating returning.
Example 2
Tia first came to the UK on 6 April 2015 and had been UK resident and subject to the remittance basis for all tax years from 2015-16 to 2023-24. She has been receiving foreign dividend income from all those tax years which she keeps in a Swiss bank account, which only contains her pre-6 April 2025 foreign dividend income. On 5 April 2024 the account balance was £750,000.
On 6 April 2024 Tia left the UK to live in Monaco and was non-resident for the 2024-25 tax year.
On 1 December 2024 Tia transferred £100,000 from her Swiss bank account to her UK bank account.
On 1 September 2025 Tia transferred a further £60,000 from her Swiss bank account to her UK bank account. Tia was non-resident for the 2025-26 tax year.
On 6 April 2026 Tia returns to live in the UK and is UK resident in the 2026-27 tax year.
Because Tia has been UK resident for 4 out of the prior 7 years before her departure and since her period of non-residence was under 5 years, Tia is subject to the temporary non-resident rules.
As Tia transferred £100,000 of pre-6 April 2025 relevant foreign income to the UK during the 2024-25 year, and a further £60,000 during the 2025-26 year, when she was temporarily non-resident, the £160,000 is treated as remitted in the 2026-27 tax year. Tia can designate this amount under the TRF and pay the TRF charge instead of this being an ordinary remittance at the usual tax rate. This is because the amounts of foreign income arose in a year when Tia was subject to the remittance basis.
She must designate the amount in her 2026-27 tax return because this is the year the amounts are treated as remitted; she cannot wait until 2027-28.
Example 3
Alessandro first came to the UK on 6 April 2016 and had been UK resident and subject to the remittance basis for all tax years from 2015-16 to 2020-21.
On 6 April 2020 Alessandro had £250,000 of foreign income from 2016-17 in an Italian bank account, which he used to purchase an investment property in Turin.
On 6 April 2021 Alessandro left the UK to live in Italy. He was non-resident for the 2021-22, 2022-23 and 2023-24 tax years.
On 30 September 2024 Alessandro sold his property in Turin for £300,000 generating a capital gain of £50,000. The proceeds were paid into his Italian bank account. Alessandro was non-resident in 2024-25.
On 6 April 2025 Alessandro returns to live in the UK and is UK resident in the 2025-26 tax year.
Because Alessandro has been UK resident for 4 out of the prior 7 years before his departure and since his period of non-residence was under 5 years, Alessandro is subject to the temporary non-resident rules. As a result, instead of arising during the period in which Alessandro was not UK resident, the gain on the disposal of his property in Turin is deemed to arise in 2025-26 (the year of his return to the UK).
As the remittance basis of taxation is no longer available from 6 April 2025, and the £50,000 gain is taxable when it is deemed to arise in the 2025-26 tax year, it is not be possible for Alessandro to claim the remittance basis in relation to this gain, even though the disposal took place in a year in which Alessandro may have been able to claim the remittance basis had he been UK resident.
Alessandro can still designate £250,000 of the £300,000 proceeds he received, since these derive from his foreign income which arose in the 2016-17 tax year when he was subject to the remittance basis. He could designate the £250,000 at any time during the TRF period, and he would then be free to remit the £250,000 after a designation without any additional tax being due.
Alessandro cannot designate the £50,000 gain element of the proceeds as an alternative to being taxed on the arising basis, since this gain is deemed to have arisen in a period after he was able to claim the remittance basis. This is the case whether he brings the gain element of the proceeds to the UK or keeps it offshore.