TRF designations reach uncertain sums held by third parties

Former remittance-basis users can designate uncertain amounts held by third parties under the temporary repatriation facility (TRF)GOV before it is known whether the amounts are qualifying overseas capitalGOV.

Where it has not yet been determined whether the amounts are qualifying overseas capital, the individual who would be chargeable if the amount were remitted may designate it under paragraph 8(5) of Schedule 10 to the Finance Act 2025.GOV The holder cannot designate on the individual's behalf; to use the TRF the individual must designate the amount on which they pay the TRF chargeGOV, in a Self Assessment return. If the amount proves to be qualifying overseas capital, it stands as designated and a later remittance takes the relevant exemption. If it proves not to be qualifying, paragraph 8(6) still treats it as designated qualifying overseas capital for all purposes except the Part 2 exemptions and reliefs, so no Part 2 protection attaches. The charge is irrevocable once the return cannot be amended: a 300,000 designation carrying a 36,000 charge that resolves into 200,000 of qualifying income and 100,000 of other capital can only be cut back to 200,000 and 24,000 while the return stays amendable.

Gains follow disposal-date sterling values, not the designation date. Foreign income uses the 6 April rate for the designation year, because designation is treated as made at the start of that year. Foreign chargeable gains are translated at the disposal and expenditure dates instead. Only a gain realised before 6 April 2025 can be qualifying overseas capitalGOV; a gain realised on or after that date is charged on the arising basis and cannot be designatedGOV. Later exchange movements are outside the facility: a dollar gain worth 80,000 at disposal but 82,000 the next 6 April can be designated only up to 80,000, and a later conversion uplift is a separate foreign-currency gain of the later year.

For mixed funds, designation counts as TRF capital from 6 April 2025 but bites in the account holding the funds when designated. Designating 50,000 of 2022-23 income after moving it into an account with other years' income makes that 50,000 TRF capital in the receiving account; it does not reach back into the source account. Holders wanting separation can move TRF capital to a dedicated TRF capital account. Former special mixed fund accounts for Overseas Workday Relief ceased to qualify on 6 April 2025 and are ordinary mixed funds, but their contents remain designatable.

Capital payments from non-resident settlements can reduce the accruing gain under paragraph 13 where some or all of the payment is designated under paragraph 3, with no prescribed ordering where the designation is smaller than the gain, so the reduction may be taken in the most beneficial way. That includes 2008 rebasing: a 1 million payment matched to pre-2025-26 trustees' gains where 600,000 escapes charge under paragraph 126 of Schedule 7 to the Finance Act 2008 can be reduced to nil by designating the remaining 400,000.

A designation does not admit or determine domicile; where domicile remains relevant after 6 April 2025, designation alone is not determinative.

The legal basis is Schedule 10 to the Finance Act 2025GOV, with section 809L of the Income Tax Act 2007 on third-party remittance conditions and paragraph 126 of Schedule 7 to the Finance Act 2008 on 2008 rebasing.