Temporary Repatriation Facility (TRF)

One of the key opportunities to come out of autumn budget is the Temporary repatriation facility. The TRF will be available for individuals who were non-UK domiciled and used the remittance basis prior to 6 April 2025.

Under this facility, taxpayers will be able to remit foreign income and gains previously protected by the remittance basis prior to 5 April 2025 to the UK at a lower tax rate as follows:

2025/26 and 2026/27 – 12% Rate

2027/28 – 15% rate

From 2028/29, remittances of pre 6 April 2025 foreign income and gains will be taxed at normal rates.

With review of the relevant structure and circumstances, it is also possible for settlors or beneficiaries of offshore trusts to benefit from this facility. Business investment relief (which provides a mechanism of remitting foreign income and gains for qualifying investments without a charge to UK tax) will also be abolished for new investments when the TRF period ends on 5 April 2028.

Some UK non-domiciled individuals (non-doms) will now be subject to exit charges on trusts if they leave the country, following changes outlined in Chancellor Rachel Reeves’ first Budget. These measures aim to target wealthy foreigners while offering several concessions to reduce the outflow of affluent residents.

Under the new rules, non-doms who have lived in the UK for more than 10 years out of the previous 20 may face charges of up to 6% on trusts they hold upon departure. However, Reeves opted not to apply the 40% inheritance tax on trusts established before October 30 upon the settlor’s death, and she also reduced the period non-doms remain liable to UK inheritance tax, cutting the “tail” from 10 years to a minimum of three.

The government also introduced a “temporary repatriation facility,” offering foreign-owned income and gains held by non-doms or in trusts a flat tax rate of 12% to 15%, compared with the maximum 45% tax on gains.

While some experts view the softer stance on inheritance tax as a way to reduce the number of non-doms leaving, the new exit charges on trusts are seen as a potential deterrent. These trusts, often holding substantial sums, previously avoided such charges, but now, under the relevant property regime, they will incur inheritance tax exit charges when a non-dom leaves the UK.

Despite the measures, some experts believe that the government’s efforts may not fully prevent wealthy individuals from relocating. While the new rules may result in £12.7 billion in revenue over the next five years, this forecast is highly uncertain, with the outcome depending on a relatively small number of high-net-worth individuals.