RDRM35340 - Remittance Basis: Amounts Remitted: Mixed Funds: Example 5 鈥� TRF capital

On 6 April 2026 Elodhi has an overseas bank account which is a mixed fund. In the 2025-26 tax year she partially designated some of her foreign income and gains that arose before 6 April 2025, when she was subject to the remittance basis, under the temporary repatriation facility (TRF) 鈥� see RDRM71000.

Elodhi鈥檚 bank account, on 6 April 2026, comprises:听

  • 拢200,000 TRF capital
  • 拢60,000 untaxed foreign employment income from 2023-24
  • 拢25,000 untaxed foreign gain from 2022-23

听On 24 April 2026 Elodhi receives a foreign dividend of 拢95,000 which is paid into her overseas bank account. As the remittance basis of taxation is no longer available, she is taxed on this dividend income as it arises in the 2026-27 tax year.听

听On 18 October 2026 Elodhi sells a property in France for 拢400,000 which she purchased with 拢300,000 untaxed foreign dividend income from 2015-16. She hadn鈥檛 made a designation on this amount. Elodhi deposits the sale proceeds into her overseas bank account.听

听On 23 November 2026 Elodhi transfers 拢450,000 from her overseas account to her UK bank account to purchase an apartment in Edinburgh.

听Immediately before the transfer to the UK, Elodhi鈥檚 mixed fund comprises:

Because TRF capital听is remitted in priority to any other income, gains or capital in the mixed fund, regardless of when the foreign income and gains that were designated arose, Elodhi鈥檚 remittance of 拢450,000 to the UK comprises:

  • 拢200,000 TRF capital听
  • 拢95,000 taxed foreign dividend from 2026-27听
  • 拢100,000 taxed foreign gain from 2026-27听
  • 拢55,000 untaxed foreign employment income from 2023-24

The income, gains and capital that are not TRF capital follow the priority ordering set out at section 809Q(4) ITA 2007 on a last in first out basis.

The temporary annualised basis (see听RDRM75500听for guidance and examples of how the annualised basis operates) would apply to Elodhi鈥檚 account in 2026-27, rather than the usual transaction-by-transaction basis, because there was TRF capital in the mixed fund at some time in the tax year. However, as Elodhi only made one remittance and no other transfers, the annualised basis does not affect the composition of the remittance in this example.听Also, Elodhi would still be able to designate further amounts of foreign income and gains in 2026-27, which she may choose to do, to take advantage of the low TRF rate rather than paying tax at the usual rates on the 拢55,000 of untaxed foreign employment income (see RDRM73100).