CheckLists.Tax (beta)
P12: Temporary repatriation facility
Existence of enquiry is a question of law
“the question as to whether the steps that HMRC took in response to the claim amount to an “enquiry”…is a question of law” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §38)
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GATEWAY CONDITIONS
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(1) T must have been subject to remittance basis in 1 tax year before 2025/26
"(5) An individual may only designate qualifying overseas capital if the individual was subject to the remittance basis for at least one tax year (being a tax year before the tax year 2025-26)." (FA 2025, Sch 10, para 1(5))
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- Subject to remittance basis (meaning)
"(11) (a) an individual is subject to the remittance basis for a tax year—
(i) in relation to the tax years 2008-09 to 2024-25, if any of sections 809B, 809D or 809E of ITA 2007 apply to the individual for that year, or
(ii) in relation to any tax year before 2008-2009, if any income or gains of the individual for that year were subject to the remittance basis (including any income or gains that would have been regarded as arising in the tax year but were not as a result of the application of the remittance basis)," (FA 2025, Sch 10, para 1)
(2) Must designate qualifying overseas capital in return for year for which UK resident
"(6) An individual designates qualifying overseas capital by making an election (a “designation election”) in a return for the tax year 2025-26, 2026-27 or 2027-28 (see paragraph 8 for further provision about designation elections).
(7) A designation election may only be made in a return if, for the tax year to which the return relates, the individual is UK resident for the purposes of income tax and capital gains tax (see Schedule 45 to FA 2013)." (FA 2025, Sch 10, para 1)
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- Can be done by amending return
"(c) references to an election being included in a return include an election being so included as a result of an amendment of the return." (FA 2025, Sch 10, para 1)
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(3) Only applies to 2025/26 to 2027/28
"(6) An individual designates qualifying overseas capital by making an election (a “designation election”) in a return for the tax year 2025-26, 2026-27 or 2027-28 (see paragraph 8 for further provision about designation elections)." (FA 2025, Sch 10, para 1)
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QUALIFYING OVERSEAS CAPITAL
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(1) Remittance basis income or gains arising in 2024/25 or earlier and not remitted
"(2) An amount of capital falls within this sub-paragraph if—
(a) it is an amount that arose in the tax year 2024-25 or an earlier tax year as income or as a gain,
(b) the amount has not been remitted to the United Kingdom, and
(c) the amount, if remitted to the United Kingdom, would have the effect mentioned in sub-paragraph (3)(a) or (b).
(3) That effect is that—
(a) the individual becomes chargeable to income tax by reference to the amount remitted in accordance with section 22, 26, 41F, 554Z9 or 554Z10 of ITEPA 2003 or section 832 of ITTOIA 2005 (income charged on remittance basis), or
(b) a gain is treated as accruing to the individual by reference to the amount remitted in accordance with paragraph 1(2) of Schedule 1 to TCGA 1992 (gains charged on remittance basis)." (FA 2025, Sch 10, para 2)
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Notes
- The capital must have arisen as the income or gain (and not be derived from it - see (3) for derived amounts).
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Test whether unremitted at end of tax year
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(4) In determining whether an amount of capital falls within sub-paragraph (2) for the purposes of making a designation election for a tax year, the condition in sub-paragraph (2)(b) is to be regarded as met if it was met at the end of that tax year." (FA 2025, Sch 10, para 2)
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- Disregard certain reliefs when determining whether remittance would be taxable
"(7) For the purposes of sub-paragraphs (2)(c) and (5)(c), a remittance is to be treated as having the effect mentioned in sub-paragraph (3)(a) or (b) if it would have that effect ignoring—
(a) Part 2 of this Schedule (exemptions etc for designated qualifying overseas capital),
(b) section 809VA of ITA 2007 (business investment relief), and
(c) section 809X of that Act (exempt property)." (FA 2025, Sch 10, para 2)
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(2) Remittance basis income or gains arising in 2024/25 or earlier and remitted in a TRF year
"(5) An amount of capital falls within this sub-paragraph if—
(a) it is an amount that arose in the tax year 2024-25 or an earlier tax year as income or as a gain,
(b) the amount is remitted to the United Kingdom in the tax year 2025-26, 2026-27 or 2027-28, and
(c) that remittance has the effect mentioned in sub-paragraph (3)(a) or (b)." (FA 2025, Sch 10, para 2)
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- Must be designated for tax year in which remitted
"(6) An amount that is qualifying overseas capital falling within sub-paragraph (5) (and that has not previously been designated as result of the amount falling within sub-paragraph (2)) may only be designated in a designation election for the tax year in which it was remitted." (FA 2025, Sch 10, para 2)
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(3) Other capital (deriving from income or gains) and situated outside the UK throughout ownership
"(8) An amount of capital falls within this sub-paragraph if—
(a) it does not fall within sub-paragraph (2) or (5),
(b) it was held by the individual immediately before 6 April 2025,
(c) it was situated outside the United Kingdom—
(i) immediately before it was most recently acquired by the individual before that date, and
(ii) throughout the period beginning with the time referred to in sub-paragraph (i) and ending with that date." (FA 2025, Sch 10, para 2)
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(4) Payment in TRF period matched to s.87 gains arising before 2025/26
(1) This paragraph applies for the tax year 2025-26, 2026-27 or 2027-28 in relation to an individual if—
(a) chargeable gains are treated as accruing to the individual in that tax year as a result of section 87(2) or 89(2) of TCGA 1992 in relation to a capital payment from the trustees of a settlement for which the individual is a beneficiary, and
(b) the settlement has a section 1(3) amount that is greater than nil for one or more tax years before 2025-26.
(2) So much of the payment as is matched with section 1(3) amounts for tax years before 2025-26 is qualifying overseas capital." (FA 2025, Sch 10, para 3)
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Reduced s.1(3) amount on subsequent applications
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"(5) Sub-paragraph (6) applies where—
(a) an amount of a capital payment has been matched with a section 1(3) amount under sub-paragraph (2), and
(b) that amount is designated as designated qualifying overseas capital.
(6) The section 1(3) amount is to be taken to have been reduced (but not below nil) by so much of it as matches with the capital payment for the purposes of any subsequent application of this paragraph." (FA 2025, Sch 10, para 3)
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- Disregard post 2024/25 gains when matching
"(3) For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—
(a) the section 1(3) amount for each tax year after the tax year 2024-25 were nil,..." (FA 2025, Sch 10, para 3)
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- Only take into account payments to qualifying individuals
"(3) For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—
...
(b) the reference in Step 2 in subsection (2) of section 87A of that Act to the total amount of capital payments received by the beneficiaries were to the total amount of capital payments—
(i) received by the individual and other beneficiaries that are qualifying individuals for the relevant tax year, and
(ii) to which section 87(2) or 89(2) of that Act applies." (FA 2025, Sch 10, para 3)
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- Qualifying individual
"(9) For the purposes of this paragraph, and paragraphs 4 and 5, an individual is a qualifying individual in a tax year if the individual—
(a) is UK resident for the purposes of income tax and capital gains tax for that tax year, and
(b) was subject to the remittance basis for at least one tax year (being a tax year before the tax year 2025-26)." (FA 2025, Sch 10, para 3)
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- Ignore post-2024/25 reductions in s.1(3) amount
"(4) For the purposes of this paragraph, ignore any reduction of a section 1(3) amount for the tax year 2024-25 or an earlier tax year resulting from the 25application of section 87 or 89(2) of TCGA 1992 in the tax year 2025-26 or any subsequent tax year." (FA 2025, Sch 10, para 3)
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(5) Payment matched with pre-2025/26 offshore income gains under s.87
Para 4
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(6) Payments to which Sch 4C applies
Para 5
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AMOUNTS TREATED AS QUALIFYING OVERSEAS CAPITAL​​
(7) Remittance basis settlements deemed income
Para 6(1)(a)(b).​
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(8) Pre-2025/26 foreign income matched with benefits under TOAA s.732
"(1) This paragraph applies—
[...]
(c) where—
(i) an individual is treated as having an amount of income for any of the tax years 2025-26, 2026-27 or 2027-28 as a result of section 732 of ITA 2007 (individuals receiving a benefit as a result of relevant transactions),
(ii) under section 735A of that Act (if it applied also for this purpose) that amount would be matched with relevant income that arose in the tax year 2024-25 or an earlier tax year, and
(iii) that amount would have been treated as relevant foreign income of the individual if it had been treated as accruing in the tax year 2024-25 and the individual had been subject to the remittance basis for that tax year." (FA 2025, Sch 10, para 6)
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- May only be designated for year in which income treated as arising
"(3) An amount of income treated as qualifying overseas capital falling within sub-paragraph (1)(a) or (c) may only be designated in a return for the tax year in which the income was treated as arising to the individual." (FA 2025, Sch 10, para 6)
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(9) Benefits that would have been matched with pre-2025/26 gains under s.87 if they had not been matched with income under TOAA s.732
"(1) Sub-paragraph (2) applies where—
(a) an individual is treated as having an amount of income for any of the tax years 2025-26, 2026-27 or 2027-28 as a result of section 732 of ITA 2007 (individuals receiving a benefit as a result of relevant transactions),
(b) the amount of income does not fall within paragraph 6(1)(c), and
(c) the benefit by reference to which that income is treated as arising would, if it were not chargeable to income tax, be an amount of qualifying overseas capital of the individual by virtue of paragraph 3 or 5 (capital payments).
(2) The amount is to be treated as an amount of qualifying overseas capital of the individual.
(3) The amount may only be designated in a return for the tax year in which the income was treated as arising to the individual (FA 2025, Sch 10, para 6)
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Notes
- For example, if the TOAA income was not foreign income (TOAA would match income to the benefit, but para 6(1)(c) would not apply).
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- The TOAA income is treated as qualifying overseas capital
"(2) The amount is to be treated as an amount of qualifying overseas capital of the individual." (FA 2025, Sch 10, para 7)
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CHARGE TO TAX ON DESIGNATED CAPITAL
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12% (2025/26, 2026/27) or 15% (2027/28)
"(8) The amount of the TRF charge on qualifying overseas capital designated by an individual is—
(a) in the case of amounts of qualifying overseas capital designated in a return for the tax year 2025-26 or 2026-27, the amount equal to 12% of the amount of that capital, and
(b) in the case of amounts of qualifying overseas capital designated in a return for the tax year 2027-28, the amount equal to 15% of the amount of that capital.
(FA 2025, Sch 10, para 1(5))
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EXEMPTIONS
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(1) No income tax on remittance of amount designated as QOC
"(1) No liability to income tax arises on the remittance of an amount of designated qualifying overseas capital."
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(2) No income tax on income treated as QOC
"No liability to income tax arises on an amount of income treated as qualifying overseas capital under paragraph 6 if the amount is designated. "
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(3) No gain on remitting designated QOC
"(1) No gain is treated as accruing under paragraph 1(2) of Schedule 1 to TCGA 1992 on the remittance of an amount of designated qualifying overseas capital.
(2) This paragraph has effect for the tax year 2025-26 and subsequent tax years" (FA 2025, Sch 10, para 12)
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(4) S.87 gains on QOC reduced by amount of QOC
"(1) Sub-paragraph (2) applies where—
(a) chargeable gains are treated as accruing to an individual in a tax year under section 87(2) or 89(2) of TCGA 1992 as a result of a capital payment made to an individual by the trustees of a settlement, and
(b) an amount of that capital payment is qualifying overseas capital that has been designated by the individual under paragraph 3.
(2) The gains are to be reduced by the amount of that designated qualifying overseas capital."
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Notes:​
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The chargeable gains matched to the capital payment that would, otherwise, result in tax under s.87 may or may not be the same as the gains that were matched for the purposes of identifying the capital payment as a QOC (the Sch 10 matching rules only apply to work out what is QOC, they do not change the matching rules under s.87 when applied as a taxing provision).
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Accordingly, the way this works is by reducing the actually matched gains (by the amount of QOC), but leaving the gains that were matched under Sch 10 available to match in future.
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To address this different, para 10(3) and (4) remove the increase in tax that can otherwise apply under TCGA 1992, s.91(2) where a capital payment is matched to gains in an earlier year if the gains matched to were the gains relied on for the purposes of Sch 10.
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OTHER TAX CONSEQUENCES ​
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Unremitted income and gains designated as QOC treated as remitted first
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Para 15
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DESIGNATION
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Only in return
“the question as to whether the steps that HMRC took in response to the claim amount to an “enquiry”…is a question of law” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §38)
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Existence of enquiry is a question of law
“the question as to whether the steps that HMRC took in response to the claim amount to an “enquiry”…is a question of law” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §38)
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Existence of enquiry is a question of law
“the question as to whether the steps that HMRC took in response to the claim amount to an “enquiry”…is a question of law” (Portland Gas Storage Ltd v. HMRC [2014] UKUT 0270 (TCC), §38)
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