RDRM75340 - Temporary repatriation facility: Mixed funds: Transfers to a TRF capital account: Breaches of the TRF deposit rule
Breaches of the rule
Sections 809RZC and 809RZD Income Tax Act 2007
A breach of the TRF deposit rule occurs if a prohibited sum is paid into, or otherwise credited to, the TRF capital account on or after the qualifying date.
A 바카라 사이트榩rohibited sum바카라 사이트� is anything other than TRF capital and interest arising on the account.
The 바카라 사이트榪ualifying date바카라 사이트� is the date the account starts to be a TRF capital account 바카라 사이트� the first date on which more than 拢10 of TRF capital is paid in to the account.
A breach of the TRF deposit rule can be remedied (see below) unless there are more than 2 days in a tax year on which one or more breaches of the rule occur. The breaches on the first 2 days can be remedied, but any breach occurring after the second day cannot be remedied.
Where there is a breach of the TRF deposit rule that has not or cannot be remedied, the account ceases to be a TRF capital account from the start of the tax year, so it ceases for the entire year, not just the portion following the unremedied breach.
Remedy
A breach is remedied if, within 30 days beginning with the day on which the prohibited sum is paid into the TRF capital account, the required amount is transferred out of the account by way of a single one-off qualifying transfer. The required amount does not need to be returned to the account it was paid from.
The 바카라 사이트榬equired amount바카라 사이트� is the total of the prohibited sums paid into the TRF account on the day of the breach.
A transfer is 바카라 사이트榪ualifying바카라 사이트� if it does not result in any amount being remitted to the UK.
Where a prohibited sum was transferred into the TRF capital account from a mixed fund and the breach is remedied, in order to determine what remains in the mixed fund and to determine what the prohibited sum is comprised of, both the original payment or payments of prohibited sums and the single one-off qualifying transfer are deemed not to have taken place. Instead, the prohibited sum is treated as being transferred directly from the mixed fund to the account that receives the single one-off qualifying transfer.
During the TRF period, an annualised basis applies to all mixed fund accounts which have held TRF capital at some point in the tax year 바카라 사이트� see RDRM75500. Where a prohibited sum is transferred back into a mixed fund to which the annualised basis applies, the prohibited sum is treated as though it never left the account.
Example - 2025-26 tax year
Patricia is UK resident and a former remittance basis user. She came to the UK for the first time on 6 April 2020.
On 6 April 2025 she had a mixed fund (account A) containing 拢1m, made up of:
- 拢400,000 foreign income from 2024-25
- 拢300,000 foreign gains from 2022-23
- 拢300,000 pre-arrival clean capital
Patricia decides to designate all her foreign income. She sets up a TRF capital account (account B) and on 30 July 2025 (the qualifying date) makes a transfer of 拢400,000 to account B from account A leaving the following amounts in the mixed fund:
- 拢300,000 foreign gains from 2022-23
- 拢300,000 pre-arrival clean capital
On 12 September 2025 Patricia pays 拢45,000 from account A to a German airline for first-class plane tickets for the family from Berlin to Cape Town, which is an offshore transfer.
On 19 December 2025 she transfers 拢200,000 from account A into account B. A breach has occurred as prohibited sums have been paid into the TRF capital account.
On 30 December 2025 Patricia remits 拢150,000 to the UK from account A. She doesn바카라 사이트檛 designate any of that amount.
On 2 January 2026 Patricia discovers the 19 December breach. To remedy this, she must transfer the required amount, 拢200,000, out of account B in a single one-off transfer before 18 January 2026.
On 3 January 2026 she transfers the 拢200,000 from account B back to account A. This successfully remedies the breach. As the annualised basis applies to account A for 2025-26 because it held TRF capital, the 拢200,000 is treated as having never left the account.
The 拢150,000 remittance on 30 December is deemed to consist entirely of foreign gains, as this follows the ordinary mixed fund ordering rules and is considered to take place at the end of the tax year before any offshore transfers (other than those of TRF capital to the TRF capital account). This is due to the annualised basis applying to account A for 2025-26 because it held TRF capital. The amount spent offshore for the plane tickets is therefore deemed to consist of 拢15,000 foreign gains and 拢30,000 clean capital.
At the end of the 2025-26 tax year account A contains:
- 拢135,000 foreign gains from 2022-23
- 拢270,000 pre-arrival clean capital
Example continued - 2026-27 tax year
Account B remains Patricia바카라 사이트檚 TRF capital account, containing 拢400,000 of TRF capital on 6 April 2026.
On 10 April 2026 Patricia pays 拢81,000 out of account A to purchase a painting in France that she hangs in her apartment in Paris. Account A is no longer treated on the annualised basis as all TRF capital was transferred out of it in a previous tax year. The payment is deemed to comprise 拢27,000 foreign gains and 拢54,000 clean capital, leaving the following in account A:
- 拢108,000 foreign gains from 2022-23
- 拢216,000 pre-arrival clean capital
On 3 June 2026 Patricia intends to make two payments of 拢60,000 each from account A into her offshore accounts C and D. Instead, both amounts are transferred to account B. A breach has occurred as prohibited sums have been paid into a TRF capital account.
On 11 June 2026 Patricia remits 拢70,000 from account A to the UK.
On 16 June 2026 Patricia discovers the 3 June errors. To remedy the breaches, she must transfer the required amount, which is the total of the prohibited sums paid into account B on 3 June, 拢120,000, out of account B in a single one-off transfer before 3 July.
On 17 June 2026 Patricia transfers 拢120,000 in a single transaction from account B to account C. This successfully remedies the breaches. In order to identify what remains in account A and what has been transferred into account C, the 拢120,000 is treated as being transferred directly from account A to account C on 3 June 2026, the date of the original transfer. As this is an offshore transfer, account A now contains:
- 拢68,000 foreign gains from 2022-23
- 拢136,000 pre-arrival clean capital
And the offshore transfer to account C comprises:
- 拢40,000 foreign gains from 2022-23
- 拢80,000 pre-arrival clean capital
The remittance on 11 June from account A is therefore deemed to be comprised of the remaining 拢68,000 foreign gains and 拢2,000 clean capital as this follows the ordinary mixed fund ordering rules.
On 5 August 2026 Patricia receives a dividend of 拢78,000, accidentally requesting it to be paid into account B. A breach has occurred as prohibited sums have been paid into the TRF capital account. She realises her error on 8 August and transfers the required amount, 拢78,000, to account D. This successfully remedies the breach, and the effect is that the 拢78,000 dividend is treated as having been paid directly into account D.
On 4 October 2026 Patricia decides to designate 拢500,000 of foreign income that is within another of her mixed funds, account E, and transfers 拢500,000 from account E to account B. As this is a transfer to a TRF capital account of an amount not exceeding the TRF capital in account E, it is all TRF capital that is paid in and there is no breach. This is because account E contained 拢500,000 TRF capital and 拢500,000 foreign gains from 2023-24, so the 拢500,000 transfer from account E comprises only TRF capital.
On 21 November 2026 Patricia sells her house in South Africa for 拢702,000 and deposits the sale proceeds into account B. Patricia bought the house with 拢450,000 clean capital and made a gain of 拢252,000 on the sale. A breach has occurred as prohibited sums have been paid into the TRF capital account. As there have already been 2 days in the 2026-27 tax year on which breaches have occurred: 3 June and 5 August, the breach occurring on the third day: 21 November is not able to be remedied.
Therefore, account B ceases to be a TRF capital account from 6 April 2026, so all transfers into and out of the account in the 2026-27 tax year are treated as ordinary transfers within the mixed fund rules at sections 809Q and 809R ITA 2007. Because account B contains TRF capital during the 2026-27 tax year, the annualised basis applies to it. This means that the transfers in 2026-27 are now treated as follows.
On 3 June 2026 the following was transferred from account A to account B:
- 拢40,000 foreign gains from 2022-23
- 拢80,000 pre-arrival clean capital
After this transfer, and after the payment of the 拢78,000 dividend into the account on 5 August 2026, account B comprises:
- 拢400,000 TRF capital
- 拢78,000 dividend income from 2026-27 (taxed on the arising basis)
- 拢40,000 foreign gains from 2022-23
- 拢80,000 pre-arrival clean capital
The 拢500,000 transfer on 4 October 2026 from account E to account B, instead of being treated as all TRF capital, is an ordinary offshore transfer and is regarded as consisting of the appropriate proportion of each kind of income and capital in account E when offshore transfers out of account E are considered under the annualised basis. Account E contained 拢500,000 TRF capital and 拢500,000 foreign gains from 2023-24 so account B comprises:
- 拢650,000 TRF capital
- 拢78,000 dividend income from 2026-27 (taxed on the arising basis)
- 拢250,000 foreign gains from 2023-24
- 拢40,000 foreign gains from 2022-23
- 拢80,000 pre-arrival clean capital
Because Patricia bought her house in South Africa with 拢450,000 clean capital and made a gain of 拢252,000 on the sale, the transfer into the account on 21 November 2026 means that account B contains:
- 拢650,000 TRF capital
- 拢78,000 dividend income from 2026-27 (taxed on the arising basis)
- 拢252,000 foreign gain from 2026-27 (taxed on the arising basis)
- 拢250,000 foreign gains from 2023-24
- 拢40,000 foreign gains from 2022-23
- 拢530,000 pre-arrival clean capital
The annualised basis applies to account B for 2026-27 so the offshore transfers to account C on 17 June of 拢120,000 and to account D on 8 August of 拢78,000 are treated as a single offshore transfer having taken place at the end of the tax year, after transfers to TRF capital accounts and remittances to the UK. As there were none of these, the single offshore transfer of 拢198,000 comprises:
- 拢71,500 TRF capital
- 拢8,580 dividend income from 2026-27 (taxed on the arising basis)
- 拢27,720 foreign gain from 2026-27 (taxed on the arising basis)
- 拢27,500 foreign gains from 2023-24
- 拢4,400 foreign gains from 2022-23
- 拢58,300 pre-arrival clean capital
This means that account B contains 拢1,602,000 comprising the remainder proportions of all the types of income, gains and capital above, instead of 拢900,000 of TRF capital plus the sale proceeds from the sale of the house.