A US citizen who has spent fifteen years in London on the remittance basis has filed American returns the whole time, on the arising basis, because citizenship leaves no choice. The offshore money has already been taxed once by Washington.
Britain now offers to settle its own claim on that same money at twelve per cent, through the Temporary Repatriation Facility. For a non-American that is a clean bargain, closing a charge that would otherwise run at full rates.
For an American it is a second charge on income that already carried a first one, levied in a year when the American return for the original year is long out of time.
The Temporary Repatriation Facility itself is well designed and the rate is genuinely low. The question is what relief exists for the overlap, and in our practice the honest answer is often very little.
So the British decision cannot be made on British figures alone. This piece sets out the facility, then the part that changes the sum.
What is the Temporary Repatriation Facility?
It is a three-year window in which a former remittance-basis user can designate old foreign income and gains and pay a flat charge on them. The helpsheet sets the conditions: UK residence in the year of designation, and previous use of the remittance basis.
Designated money can then be brought into Britain whenever the owner likes, with no further UK tax on the remittance.
Is the charge even creditable?
This is a genuinely open question and we will not pretend otherwise. The American credit covers foreign taxes on income, and this charge falls on designated capital rather than on income arising in the year of designation.
A reasonable argument runs each way, and the answer may depend on facts specific to the taxpayer. We have not found authority settling it.
So anybody designating a large sum should get the position considered on their own numbers before they file, rather than after.
That is an unsatisfying answer, and publishing a confident one would be worse. Our note on the carryover rules covers where unusable credit goes.
Why an American's sum is different
Because the United States taxes its citizens on worldwide income as it arises, and offers nothing resembling the Temporary Repatriation Facility. The income somebody designates today already went on an American return years ago and carried tax then.
So the designation is not clearing a double charge. It is adding a British charge to income that already carried an American one, in a year long closed.
Nothing can be reopened on the American side either. Those years have run out of time for an amended return, and the tax paid then stays paid.
Relief for that overlap would have to come through the American credit system, and the credit follows the year of payment. A charge paid in 2026 looks for American tax on foreign income in 2026.
So somebody with little current foreign income may find the charge entirely unrelieved. The twelve per cent then costs twelve per cent.
The rates and the deadline
The Temporary Repatriation Facility charges twelve per cent for 2025-26 and for 2026-27, then fifteen per cent for 2027-28. Schedule 10 of the Finance Act 2025 carries the charge itself.
After that the window closes and nothing reopens it. Undesignated money reverts to ordinary rates on any later remittance.
The rate applies to the amount designated rather than to anything remitted, so the bill is known the moment the figure is chosen. There is no later adjustment and no clawback.
So the cheapest two years are the current one and the one just ended. Waiting costs three percentage points and then everything.
Diary the date now. This window sits in statute, not in a concession somebody might stretch.
| Tax year | Rate on designated capital | Position |
|---|---|---|
| 2025 to 2026 | 12% | First year of the window |
| 2026 to 2027 | 12% | Current year, same rate |
| 2027 to 2028 | 15% | Final year, three points dearer |
| 2028 to 2029 onward | Ordinary rates on remittance | Window closed |
| Already-designated capital | Nil on remittance | Survives the window closing |
What counts as qualifying overseas capital
Foreign income and gains from before 6 April 2025, which is the category the Temporary Repatriation Facility was built around. HMRC's manual sets out what falls inside it.
Funds of uncertain origin also qualify, which is more useful than it sounds. A mixed account nobody can unpick is exactly the thing that has sat offshore untouched for a decade.
Capital payments and income from non-UK trusts matched to pre-April 2025 amounts fall inside it too, along with overseas assets such as property and investments.
So the net reaches a long way. The date limits it, not the type of asset.
Do you have to bring the money in?
No, and this is the detail most summaries of the Temporary Repatriation Facility get wrong. Designated amounts do not have to be remitted to secure the lower rate, so somebody can pay the charge now and leave the money abroad indefinitely, bringing it in whenever it suits.
You do have to report a remittance of designated money in the same year as the designation. That is a reporting point rather than a condition.
The order matters the other way round, though. Remitting first and designating in a later year does not work.
So designate on the timetable the rate dictates, and move the money on your own.
How the designation is made
On the residence and foreign income pages of the Self Assessment return, which is the SA109. The election sits in its own box, with separate boxes for the totals and for trust-related amounts.
Everything goes in sterling. Foreign income converts at the rate on the designation date, which counts as 6 April 2025 for the first year, and foreign gains convert at the rate on the day of disposal.
Our note on registering for Self Assessment covers getting inside the system if you are not already.
So the mechanics are ordinary even though the relief is not. It is a box on a return, filed by the usual deadline.
- Establish which offshore amounts date from before 6 April 2025.
- Confirm you were UK resident this year and used the remittance basis previously.
- Convert each amount to sterling on the right date for income and for gains.
- Decide how much to designate, which need not be everything.
- Make the election on the SA109 pages of the Self Assessment return.
- Model the US position for the same year before filing, not after.
- Keep a schedule of what was designated, so later remittances can be traced to it.
Why the charge sits outside everything else
Capital designated under the Temporary Repatriation Facility does not enter the main tax calculation at all. It leaves adjusted net income alone, which means it does not drag anybody into the child benefit charge or out of the personal allowance.
It does not affect bands or rates either, so it cannot push other income up a band. Pension figures and payments on account stay where they were.
That isolation is deliberate and it is generous. A large designation in one year does nothing to the rest of that year's return.
So model the charge on its own. It behaves like a separate bill rather than like extra income.
The foreign tax credit problem
No foreign tax credit can be set against the charge, which HMRC's guidance states directly. The flat rate therefore bites whatever survives foreign tax.
That rule cuts both ways for an American. It means the charge bites a net figure, which helps, and it means no American tax can reduce it, which does not.
The practical effect is a clean twelve per cent of whatever reaches the designation, with no offsets available on the British side.
So treat the rate as the real cost rather than a headline. Nothing on the UK return will bring it down.
An illustrative example
Take a US citizen who has lived in London for fifteen years and claimed the remittance basis throughout. She has investment income sitting in a Jersey account, all of it reported on her American returns as it arose.
Designating it costs twelve per cent to HMRC. Her American returns for those earlier years have closed, so nothing there changes.
On her current American return the charge is a foreign tax paid in this year. Whether it finds room depends entirely on what foreign income she has now.
In our practice that room runs thin, because somebody living on investment income in Britain may hold very little the American rules treat as foreign.
When it is still worth doing
Where the money has a job to do in Britain. Twelve per cent to unlock a house purchase beats forty-five per cent on the same funds by a wide margin.
Where a mortgage or a deposit is in view, the comparison is stark. Twelve per cent on capital already abroad usually beats borrowing against it at a commercial rate.
Where the account is a mixed fund nobody can analyse. Designation buys certainty on money that would otherwise be unusable.
Where current foreign income gives the credit something to work against. Then part of the charge may come back on the American side.
So the case is strongest for people who intend to spend the money here. It weakens for people designating purely because the window happens to be there.
What happens after the window
Money designated under the Temporary Repatriation Facility stays designated, and comes in at any point afterwards without a further charge. That part survives the window closing.
Undesignated pre-April 2025 income and gains return to ordinary rates on remittance, exactly as before. Nothing about that changes.
Record-keeping falls to the owner, because HMRC expects each remittance to trace back to designated capital.
So keep the schedule carefully. The relief is only as good as the evidence that a given payment came from the designated pot.
Common mistakes we see
The first is assuming the money has to come in. It does not, and believing it does leads people to remit funds they did not need to move.
The second is remitting first and designating later. The order matters, and reversing it loses the rate.
The third is treating twelve per cent as the net cost without checking the American side. For some people it is the net cost, and for others it is simply a new bill.
A fourth is missing the records. Designated capital has to be traceable years later, and nobody else keeps that schedule.
How we help with a designation
We start by establishing what is actually in the offshore accounts and which part dates from before April 2025. That analysis drives the size of any designation.
Then we model the American position for the year of payment, including whether any credit realistically finds room.
Our UK Self Assessment work covers the SA109 pages and the schedule that has to outlive them, and you can get in touch while the twelve per cent rate is still open.
So the two sides need deciding together. The British rate holds steady; what it finally costs does not.
