Finance Act 2025

Part 1U.K.Temporary repatriation facility charge

Introduction and chargeU.K.

1(1)This Part of this Schedule sets out a charge on amounts of qualifying overseas capital of individuals previously subject to the remittance basis.

(2)The charge is to be known as the temporary repatriation facility charge, and is referred to in this Schedule as the “TRF charge”.

(3)Paragraphs 2 to 6 set out when amounts are, or are to be treated, as qualifying overseas capital.

(4)Amounts of qualifying overseas capital of an individual are subject to the TRF charge only if the individual designates them in accordance with this Part of this Schedule.

(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).

(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).

(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.

(9)Part 2 of this Schedule sets out exemptions and reliefs from income tax and capital gains tax that apply where amounts of qualifying overseas capital are designated.

(10)Part 3 of this Schedule amends or modifies rules about the remittance of amounts where an individual has designated qualifying overseas capital.

(11)For the purposes of this Part of this Schedule—

(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), and

(b)“return” means a return under section 8 of TMA 1970 (personal return for income tax and capital gains tax), and

(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.

Qualifying overseas capital: main casesU.K.

2(1)An amount of capital is “qualifying overseas capital” of an individual if it falls within sub-paragraph (2), (5) or (8).

(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).

(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.

(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).

(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.

(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).

(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.

(9)References in Parts 1 and 2 of this Schedule to amounts being remitted to the United Kingdom are to be construed in accordance with Chapter A1 of Part 14 of ITA 2007 (see, in particular, sections 809L to 809O of that Act).

Capital payments made by settlement: section 87 and 89 TCGA 1992 casesU.K.

3(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.

(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, and

(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.

(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 application of section 87 or 89(2) of TCGA 1992 in the tax year 2025-26 or any subsequent tax year.

(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.

(7)This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and paragraphs 4 and 5 (and no section 1(3) amounts or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).

(8)For the purposes of this paragraph—

(a)“section 1(3) amount” has the meaning it has in section 87 of TCGA 1992, and

(b)section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.

(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).

Capital payments made by settlement: offshore income gains casesU.K.

4(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) of TCGA 1992, as it applies in relation to OIG amounts as a result of regulation 20 of the OFT Regulations, in relation to a capital payment from the trustees of a settlement for which the individual is a beneficiary, and

(b)the settlement has an OIG 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 OIG amounts for tax years before 2025-26 is qualifying overseas capital.

(3)For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—

(a)the OIG amount for each tax year after the tax year 2024-25 were nil, and

(b)the reference in Step 2 in subsection (2) of 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) of that Act applies in relation to OIG amounts (as a result of regulation 20 of the OFT regulations).

(4)For the purposes of this paragraph, ignore any reduction of an OIG amount for the tax year 2024-25 or an earlier tax year resulting from the application of section 87 or 89(2) of TCGA 1992 in the tax year 2025-26 or any subsequent tax year.

(5)Sub-paragraph (6) applies where—

(a)an amount of a capital payment has been matched with an OIG amount under sub-paragraph (2), and

(b)that amount is designated as designated qualifying overseas capital.

(6)The OIG 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.

(7)This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and paragraphs 3 and 5 (and no OIG amount or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).

(8)For the purposes of this paragraph—

(a)the “OFT Regulations” means the Offshore Funds (Tax) Regulations 2009,

(b)“OIG amount” is to be construed in accordance with the OFT Regulations, and

(c)section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.

Capital payments made by settlement: Schedule 4C casesU.K.

5(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 paragraph 8(1) of Schedule 4C to TCGA 1992 in relation to a capital payment from the trustees of a relevant settlement for which the individual is a beneficiary, and

(b)the section 1(3) amount in the Schedule 4C pool 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 in the Schedule 4C pool for tax years before 2025-26 is qualifying overseas capital.

(3)For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—

(a)the section 1(3) amount in the Schedule 4C pool for each tax year after the tax year 2024-25 were nil, and

(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 paragraph 8(1) of Schedule 4C to that Act applies in relation to section 1(3) amounts in the Schedule 4C pool.

(4)For the purposes of this paragraph, ignore any reduction of a section 1(3) amount in the Schedule 4C pool for the tax year 2024-25 or an earlier tax year resulting from the application of paragraph 8(1) of Schedule 4C to TCGA 1992 in the tax year 2025-26 or any subsequent tax year.

(5)Sub-paragraph (6) applies where—

(a)an amount of a capital payment has been matched with a section 1(3) amount in the Schedule 4C pool under sub-paragraph (2), and

(b)that amount is designated as designated qualifying overseas capital.

(6)The section 1(3) amount in the Schedule 4C pool 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.

(7)This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and paragraphs 3 and 4 (and no section 1(3) amount in the Schedule 4C pool or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).

(8)For the purposes of this paragraph—

(a)“section 1(3) amount in the Schedule 4C pool” and “relevant settlement” are to be construed in accordance with Schedule 4C to TCGA 1992, and

(b)section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.

Amounts of income treated as qualifying overseas capitalU.K.

6(1)This paragraph applies—

(a)where an individual is treated as having an amount of income as a result of section 643A of ITTOIA 2005 (benefits paid out of protected foreign-source income or transitional trust income) for any of the tax years 2025-26, 2026-27 or 2027-28,

(b)where an individual would have been treated as having an amount of income as a result of any other provision of Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor or family) in the tax year 2024-25 or an earlier tax year but was not only as a result of the application of section 648(3) of that Act (relevant foreign income treated as arising under settlement only if and when remitted), or

(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.

(2)An amount of income falling within paragraph (a), (b) or (c) of sub-paragraph (1) is to be treated as an amount of qualifying overseas capital of the individual.

(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.

(4)For the purposes of this paragraph “relevant foreign income” has the meaning it has in the Income Tax Acts.

Deemed income under section 732 of ITA 2007 where pre-2025 gains available for matchingU.K.

7(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.

Designation of qualifying overseas capitalU.K.

8(1)A designation election for a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year.

(2)The designation must—

(a)set out the total amount designated, and

(b)identify which (if any) of the amounts designated have been remitted in the tax year to which the return relates.

(3)Where an amount of relevant foreign tax has been paid, or is payable, in respect of an amount of qualifying overseas capital, only so much of the amount as remains after deducting the amount of relevant foreign tax paid, or payable, may be designated.

(4)For the purposes of this paragraph, relevant foreign tax means a tax imposed by the law of a territory outside the United Kingdom that corresponds to—

(a)income tax, or

(b)capital gains tax.

(5)An individual may designate an amount where it has not yet been determined—

(a)whether the amount is qualifying overseas capital, or

(b)whether, or to what extent, relevant foreign tax is, or was, payable in respect of the amount.

(6)An amount designated—

(a)that is determined to not be qualifying overseas capital, or

(b)that should not have been designated as a result of sub-paragraph (3),

is to be nevertheless treated as designated qualifying overseas capital, other than for the purpose of Part 2 of this Schedule (exemptions etc).

(7)Where an amount is designated, it is treated as designated qualifying overseas capital from the beginning of the tax year to which the return in which it is designated relates.

(8)An individual who makes a designation election must keep a record of each amount designated.

Payment of the TRF charge through the income tax systemU.K.

9(1)An amount of designated qualifying overseas capital is chargeable to the TRF charge for the tax year to which the return in which it is designated relates.

(2)Amounts of TRF charge are to be charged as if they were amounts of income tax.

(3)Section 23 of ITA 2007 (calculation of income tax liability) applies in relation to a person liable to the TRF charge as if paragraph 1(8) were included in the lists of provisions in section 30(1) of that Act (amounts of tax added at Step 7).

(4)For the purposes of the collection and management of the TRF charge, all other enactments applying generally to income tax apply to the TRF charge.

(5)Those enactments include—

(a)those relating to returns of information and the supply of accounts, statements and reports,

(b)those relating to the assessing, collecting and receiving of income tax,

(c)those conferring or regulating a right of appeal, and

(d)those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.

(6)But section 59A of TMA 1970 (payments on account of income tax) does not apply in relation to amounts of TRF charge.

(7)For the purposes of section 12B of TMA 1970 (as applied as a result of sub-paragraph (4)), the records required to be kept as a result of paragraph 8(8) are to be regarded as records that must be kept for the purposes of enabling an individual to make and deliver a correct and complete return.