The Temporary Repatriation Facility designates amounts of "qualifying overseas capital" defined at Finance Act 2025 Schedule 10 paragraph 2. The paragraph sets out three distinct scenarios, each running independently. For a legacy non-dom with a mixed offshore portfolio, the operational question is which slices of which holdings qualify under which scenario, and how to designate them across the three-year window to minimise total TRF charge. This page is the qualifying-capital companion to the TRF pillar (which covers the rate schedule, designation deadlines, and clean-capital effect).

The source-identification burden falls on the individual making the designation. Each designated amount must be specifically traced to one of the three scenarios; HMRC's enquiry pattern in TRF cases will focus on the classification and the underlying source evidence. The detailed tracing rules will be set out in the HMRC RDRM rewrite for FA 2025; in the meantime, sessions advising should default to comprehensive documentation, drawing on the historic mixed-fund principles under ITA 2007 sections 809Q to 809S (now legacy but conceptually useful as the source-tracing starting point).

Scenario A at paragraph 2(2): pre-2025-26 unremitted foreign income or gains

Schedule 10 paragraph 2(2) covers amounts that arose as foreign income or foreign chargeable gains in tax year 2024-25 or earlier AND have not been remitted to the UK by the date of designation. This is the canonical legacy unremitted-balance category: foreign income or gains accumulated offshore under the remittance basis pre-2025-26, held continuously offshore through to the date of designation.

Two source requirements. The amount must trace to foreign income or gains in the technical sense: foreign rental income (Schedule A type income arising from non-UK situs property); foreign dividend or interest income; foreign trade profits; foreign chargeable gains (gains on non-UK-situs assets). Pure capital movements (transfers from one offshore account to another; gifts received from non-UK family) do not qualify under Scenario A; they may qualify under Scenario C.

The "has not been remitted" condition runs through to the date of designation. If the amount has been brought onshore at any point before the designation, Scenario A no longer applies; the amount may instead fall under Scenario B if the remittance is within the TRF window.

Scenario B at paragraph 2(5): pre-2025-26 foreign income or gains remitted in-window

Schedule 10 paragraph 2(5) covers the same origin (pre-2025-26 foreign income or gains) but the timing differs: the amount IS actually remitted to the UK during tax years 2025-26, 2026-27, or 2027-28. Scenario B exists because some legacy non-doms want to bring their offshore balances onshore during the TRF window itself, not designate-while-keeping-offshore.

The TRF designation in the year of remittance crystallises the rate at 12% or 15% rather than triggering the higher remittance-basis tax at the marginal rate that would otherwise apply on the in-year remittance. Scenario B is operationally similar to Scenario A: same underlying source requirement, same TRF charge calculation, same designation deadline. The difference is the timing of the actual capital movement: Scenario A keeps the capital offshore at designation; Scenario B moves it onshore during the window.

For an individual who is planning to bring offshore balances onshore anyway during the window (perhaps for UK investment, UK property acquisition, UK lifestyle), Scenario B is the natural classification. The designation locks in the favourable rate; the actual remittance is then UK-tax-free under the clean-capital effect from Schedule 10 Parts 2 and 3.

Scenario C at paragraph 2(8): pre-6-April-2025 offshore capital not within A or B

Schedule 10 paragraph 2(8) is the residual catch-all. The amount must not fall within Scenarios A or B (so it must not be foreign income or gains in the technical sense), must have been held by the individual immediately before 6 April 2025, and must have been situated outside the UK throughout the period from acquisition to the date of designation. Scenario C picks up offshore capital with mixed or clean-capital-equivalent origins that doesn't have a foreign-income or foreign-gain trigger but is structurally similar to the unremitted positions the TRF is designed to clean up.

Examples that may qualify under Scenario C: inherited offshore capital from a non-UK estate where the underlying inheritance was not a UK chargeable event in the individual's hands; long-held offshore bank deposits from a pre-UK-residence period (clean capital under pre-FA-2025 mixed-fund rules); gift receipts from non-UK family members; original purchase capital for offshore investments (the cost-basis slice of a portfolio's value, distinct from any unrealised gain).

Scenario C is narrower than Scenarios A and B but useful where it applies. The "held immediately before 6 April 2025" condition is restrictive: a recent gift from non-UK family (e.g., received in 2024-25 and held by 5 April 2025) may qualify, but capital that was still in the donor's hands at that date does not. The "situated outside the UK throughout" condition is satisfied where the capital has never been remitted to the UK; even a temporary onshore booking through a UK account would break the chain.

The source-identification approach for mingled offshore accounts

The challenge is that long-running offshore accounts typically hold a mix of capital from different sources: original deposits from a clean-capital-equivalent pre-UK-residence period; accumulated foreign dividend income; realised gains on past disposals; reinvested income and capital. Each component has different TRF treatment under the three scenarios. The standard practice is a "tracing report" that runs through the account's history, identifying for each period the inflows and outflows, the underlying source of each inflow, and the running balance attributable to each source category.

For very long-running accounts (15 to 25 years), the tracing can be a substantial undertaking. The principle of last-in-first-out (LIFO) generally applies to remittances under the historic mixed-fund rules unless the taxpayer can demonstrate a specific identification approach. The mixed-fund rules under ITA 2007 sections 809Q to 809S were the operative framework for remittance-basis tracing pre-FA-2025; while those sections are now historic (the remittance basis has been abolished), the conceptual framework remains the starting point for source-identification under TRF.

HMRC's RDRM rewrite for FA 2025 will set out the detailed source-tracing rules specifically for TRF designation purposes. Until the updated manual is published, sessions advising should default to comprehensive tracing-report documentation, with supporting evidence (offshore bank statements, brokerage records, trust distribution records, source-jurisdiction tax returns) for each component of the designated amount.

Unrealised gains on offshore investments

An unrealised gain on an offshore investment held at 6 April 2025 has not arisen as a chargeable gain in the technical sense; the gain only crystallises on disposal. So unrealised gains are not directly within Scenarios A or B at the time of designation. The individual has two options:

  • Realise the gain during the TRF window. Sell the underlying offshore investment before 5 April 2028; the realised gain is then a Scenario A or B qualifying amount and can be designated at the favourable rate (12% in 2025-26 or 2026-27; 15% in 2027-28). For a £200k unrealised gain on offshore shares, realising in 2025-26 and designating produces a £24k TRF charge at 12%.
  • Leave the gain unrealised. On later realisation (post-2027-28), the gain is on standard CGT arising basis at 18% to 24%; no TRF route available because the window has closed. The £200k unrealised gain realised in 2030-31 would attract £48k of CGT at 24% on residential gains, or £36k at 18% on basic-rate-band gains.

For most legacy non-doms with substantial unrealised offshore gains, the realise-and-designate option is preferable. The 12% rate is structurally cheaper than the 18% to 24% post-window rate, and the cash flows allow for the additional planning room of clean capital under the TRF mechanism.

Worked source-identification: Mr Almeida's offshore portfolio

Take a hypothetical legacy non-dom, Mr Almeida. UK-resident since 2008-09; non-UK-domiciled-of-origin (Portuguese); used the remittance basis under ITA 2007 s.809B throughout 2008-09 to 2024-25 with the £30,000 or £60,000 remittance-basis charge in each long-term year. At 6 April 2025 his offshore portfolio comprises:

  • £800k Swiss bank deposit balance (the result of an original £200k pre-UK-residence deposit in 2007, plus £600k of accumulated unremitted foreign dividend and interest income over 17 years);
  • £450k of unrealised gains on Singapore investment shares held since 2014 (the shares cost £350k and are now worth £800k; the £450k gain is unrealised at 6 April 2025);
  • £300k inherited in 2023-24 from a non-UK Portuguese grandparent (deposited offshore from receipt; never brought onshore).

Tracing analysis for the Swiss bank balance. The £200k pre-2007 original deposit pre-dates Mr Almeida's UK residence; it is not foreign income or gains in his hands (it was clean capital from his pre-UK-residence period). The £600k accumulated income and gains over 17 years arose as foreign dividend, foreign interest, and realised gains on offshore investments while he was on the remittance basis. So the £800k splits: £200k under Scenario C (pre-6 April 2025 held capital, not foreign income or gain origin), £600k under Scenario A (pre-2025-26 unremitted foreign income or gains).

Tracing for the Singapore investment. The shares are held; the gain is unrealised. Neither Scenario A nor B applies until the gain crystallises. Designation strategy: realise the shares in 2026-27 (sell at then-market price of £800k, crystallising the £450k gain), and designate the £450k gain under Scenario A in the 2026-27 return at 12% rate (£54k TRF charge). The £350k cost basis is clean capital and is not a TRF amount.

Tracing for the inheritance. The £300k was received from a non-UK family member; the underlying inheritance was not a UK chargeable event in Mr Almeida's hands; the amount has been held offshore since receipt. Scenario C qualifies: held immediately before 6 April 2025, situated outside UK throughout, not within Scenarios A or B.

Designation plan. 2025-26: designate £600k Scenario A + £200k Scenario C + £300k Scenario C = £1.1m at 12% rate = £132k TRF charge. 2026-27: realise Singapore investments, designate £450k Scenario A at 12% rate = £54k TRF charge. Total TRF: £186k for £1.55m of clean capital. Alternative without TRF: marginal-rate tax on later remittance of £600k Scenario A income (~£240k+ at 40%) plus arising-basis CGT on Singapore gains (~£110k at 24%) = £350k+ alternative cost. Net saving: ~£164k+, plus clean-capital optionality on the Scenario C amounts.

Practical limits on Scenario C: the situs requirement

Scenario C requires the capital to have been "situated outside the United Kingdom throughout" the period from acquisition to designation. The situs test runs continuously: any onshore booking, even temporary, breaks the chain and disqualifies the slice from Scenario C. Practical implications. Cash held in a UK-branch account of a Swiss bank is UK-situs (the deposit is at a UK location); the same cash held in the Swiss branch of the same bank is non-UK situs. UK-issued securities held in an offshore portfolio account are UK-situs (securities take their situs from the issuer's residence; UK government securities are UK situs even when held in a Cayman custodian account). Direct holdings of UK property are UK situs by definition.

The cleanest Scenario C profiles are pure foreign-jurisdiction holdings: deposits at non-UK branches of non-UK banks; shares in non-UK-resident companies held at non-UK custodians; foreign-currency or non-sterling assets in non-UK accounts. Mixed positions (offshore custody of UK-issued securities; UK-branch deposits) need careful situs analysis to determine which slice qualifies as Scenario C and which is structurally UK situs.

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HMRC enquiry pattern on source-identification

HMRC's enquiry approach on TRF cases will focus on three areas. First, the Scenario A or B versus Scenario C classification. HMRC will look closely at amounts the taxpayer has classified as Scenario C because the Scenario C residual is conceptually broader and may be used to capture amounts that should more properly be Scenario A or B (with the same TRF charge but a different underlying-source story). The classification matters less for the TRF charge calculation than for the underlying source documentation and any post-TRF residual tax exposure.

Second, the source-of-funds tracing on mingled accounts. HMRC may request detailed records of pre-2025-26 inflows and outflows on each offshore account, with supporting evidence of underlying income receipts, gain realisations, and remittance movements. Sessions advising should produce a comprehensive tracing report before designation and retain supporting source documents (offshore bank statements; brokerage records; trust distribution statements; source-jurisdiction tax returns) for the standard six-year HMRC enquiry window plus longer for any uncertain classifications.

Third, the Scenario C "held immediately before 6 April 2025" condition. HMRC may challenge late acquisitions: capital received in late 2024-25 or early 2025-26 that the individual has classified as Scenario C. The timing must be clean: the capital must have been the individual's own holding by 5 April 2025 at the latest, situated outside the UK at that date, and continuously situated outside the UK from acquisition through to designation. Borderline timing (capital received in the few days before 6 April 2025) should be evidenced robustly.

Partial-designation strategy

The designation is per-amount: the individual can designate a portion of a larger source under one scenario in one year and the remaining portion in a later year. Partial-designation flexibility is operationally useful in three situations.

First, where the cash-flow cost of paying the full TRF charge in one year is too high. A £2m total designation would attract £240k of TRF charge at 12% in 2025-26 (due January 2027). Spreading across two years at 12% rate (£1m each, total £240k charge across two payment dates) eases the cash flow.

Second, where the source-identification on parts of a portfolio is uncertain. Designating the clearly-Scenario A or clearly-Scenario C slice first, with the more uncertain slice deferred to year 2 or 3 after further tracing analysis, manages the risk of HMRC enquiry on the uncertain slice while securing the favourable rate on the clear slice.

Third, where future capital realisations may produce additional Scenario A or B amounts. An individual planning to realise offshore investments over the three-year window can spread designations to match the realisation profile, optimising the total TRF charge and the timing of cash outflows.

The interaction with the residence requirement and split-year cases

The designation must be made in a year when the individual is UK-resident (Schedule 10 paragraph 1(4)). For an individual who is mid-year-residence-transition (e.g., a split-year departure under FA 2013 Schedule 45), the question is whether the designation can still be validly made for the year of departure. HMRC's likely position is that the SRT-resolved residence status for the year as a whole determines eligibility for designation that year; a split-year departure year that resolves to UK-resident overall (which is the standard SRT outcome) is still a valid designation year, but the residence status should be evidenced clearly.

For an individual who has fully emigrated in (say) 2025-26 and is non-UK resident throughout 2026-27 and 2027-28, the TRF window effectively closes for them at the end of 2025-26. No further designations in later years can be made. Sessions advising legacy non-doms with mid-window emigration plans should run the designation strategy front-loaded into the year of clear UK residence, recognising the closure of the route on departure.

Documentation discipline for the designation

For each designated amount the individual should retain: the source-identification analysis documenting the underlying scenario classification (with reasoning); the supporting source documents (offshore bank statements covering the relevant period; brokerage records; trust distribution statements; source-jurisdiction tax returns where relevant); the calculation of the designated amount with any partial-designation reasoning; and the TRF charge computation for the year (designated amount times the year's rate of 12% or 15%). The documentation supports the self-assessment return entry, any later HMRC enquiry, and the clean-capital status of the designated slice on any future remittance.

The retention period for TRF designation records should match or exceed the standard HMRC enquiry windows: six years post-return-filing for general enquiry; twenty years for deliberate-behaviour discovery. Best practice is permanent retention of the source-identification reports given the clean-capital status persists indefinitely after designation; HMRC may need to verify the underlying source decades into the future.

What this page does not cover

This page is the TRF qualifying-capital companion. It does not cover: the TRF rate schedule, designation deadlines, eligibility gateway, or clean-capital effect (the TRF pillar covers); the parallel FIG regime for new arrivals (the FIG eligibility pillar and election-mechanics pages cover); the CGT rebasing election (the dedicated rebasing page covers); the IHT LTR test (the s.6A pillar covers); the offshore-trust s.48ZA mechanics (the EPT companion covers).

Statutory and HMRC sources cited above: Finance Act 2025 Schedule 10; Finance Act 2025 section 41; ITA 2007 section 809B (historic remittance-basis claim); ITA 2007 sections 809Q-809S (historic mixed-fund rules); HMRC Residence, Domicile and Remittance Manual.