Can I Transfer Money to the UK?

Foreign nationals living in the UK will likely have money in foreign bank accounts and often they would like to transfer some of this to the UK. Some money can be transferred without a tax charge and some will be taxable upon remittance. This article discusses whether it is possible to access any “remittable income”.

The old rules…

Prior to April 2025, relief on foreign asset was assessed based on domicile status. A requirement of the old Remittance Basis rules and OWR was that the foreign income must be paid and retained outside of the UK. This meant that an offshore account can contain money that cannot be transferred to the UK free of charge and money that can. We refer to this type of account as a “Mixed Fund”. HMRC have specific legislation which governs the type of income in these accounts and the order in which these are deemed to be transferred to the UK.

What are the different types of income?

Firstly, it is important to understand the different types of income that you can have in an offshore account. The UK legislation actually lists nine types of income but for the sake of simplicity we’ll just be looking at the four main types you are likely to have.

1. UK employment income – this is employment income that has been earned in the UK where UK tax has been withheld or is due to be paid. This income can be transferred to the UK without incurring a charge.
2. Foreign earnings – this is income earned outside of the UK that has not been subject to UK tax. This usually arises where a taxpayer claims Overseas Workday Relief. Transferring this money to the UK would incur an income tax charge.
3. Foreign investment income – this is self-explanatory but can be broken down by whether it is income or chargeable gains and whether foreign tax has been paid. If the taxpayer claimed the remittance basis and has not paid UK tax on this income, transferring to the UK will incur a charge at the top rate of income tax despite the favourable allowances and rates for certain types of investment income currently available in the UK.
4. Capital – this is rather loosely defined as anything that cannot be categorised in the above. In real terms this is usually money that was earned prior to moving to the UK (and does not relate to a previous period of UK residence). This money can be transferred to the UK free of charge (albeit impossible in some circumstances – see notes below).

All these categories are organised by tax year. Meaning that income and capital for the current tax year will be separate to the previous tax year, and so on.

In what order are these amounts remitted to the UK?

HMRC’s legislation also tells us the order in which these amounts are deemed to be remitted when making transfers out of the account. For the purposes of this article we will look at two types of transfer; an offshore transfer (to another account based outside of the UK) and a UK transfer (inbound to an onshore account).

• A UK transfer will be remitted in the order listed above from the current or most recent tax year first. For example, UK employment income earned in the current tax year  will be the first thing to be transferred, followed by foreign earnings from the current tax year and so on. Once all income sources from the current year have been depleted, the list would start again for the most recent tax year that has ended.

You may have noticed from this example that it is impossible to access capital in the UK without first transferring taxable foreign income to the UK. There are ways to avoid this tricky situation with some early planning.

• An offshore transfer will consist of a rateable portion of each type of income in the account immediately prior to the transfer. For example, if the account contained £1,000 and is made up of equal 25% shares of the above categories and you transferred £100 offshore, then £25 would be UK employment income, £25 would be foreign earnings, £25 would be foreign investment income and £25 would be capital.

A common misconception for individuals who have set up a qualifying account for overseas workday relief is that they can transfer money to a separate offshore account to isolate foreign earnings but in fact by doing this they are transferring a combination of UK and foreign income into the other account. If they later decided to transfer an amount to the UK then they could inadvertently be transferring foreign earnings and may incur a tax charge.

NEW: Temporary Repatriation Facility

In April 2025, HMRC introduced the new FIG regime which replaced the domicile and remittance basis rules. With it came the Temporary Repatriation Facility which enables individuals to “designated” unreported foreign income and gains in offshore accounts. There is a 12% charge on designated income, which can then be remitted to the UK without a further charge. Another benefit is that it goes to the top of the remittance ordering, so that it will be the first pool of money that will be transferred when making a direct transfer to the UK.

It is important to note that the same offshore transfer rules apply.

The tax year in which the designation is made will determine the tax rate. The tax rate on designated income & gains under TRF will be 12% in 2025/26 and 2026/27. This will rise to 15% in 2027/28. The charge is paid on designation, i.e. with the tax return due 31 January following the end of the tax year.

There is no requirement for amounts to be remitted during the tax year in which it is designated, or in any later tax year. The TRF charge will be payable on designation and no further UK tax will be payable on this designated amount; regardless of the tax year it is remitted.

A foreign tax credit cannot be claimed for foreign taxes paid against the TRF charge so there is exposure to double taxation. However, often the foreign tax paid plus the 12% TRF charge are less than the 45% charge that would be applicable under normal remittance rules.

Starting from 2028/29, any remittances of income and gains to the UK that has not been designated under the TRF will continue to be taxed at full rates.

What can I do now to ensure that my offshore funds are accessible in the UK?

For income and gains generated after April 2025, there is no restriction on remittance. It is therefore sensible to separate offshore income pre and post this date.

There were previously options available for simplifying offshore accounts to make remitting money easier in future. However, now that the old rules have been abolished these are no longer relevant and this section has been removed.

Going forward, the TRF makes offshore funds accessible, but the difficulty is identifying what is in the account and how much to designate. We will be happy to assist with this analysis.

This article should not be taken as tax advice and should be viewed as an interpretation of HMRC’s legislation on the composition of mixed funds. Every case is different, and the above details may not be relevant to you. The rules around this area are complex and we strongly recommend that you seek tax advice before making a transfer to the UK if you are at all unsure as to the consequences of doing so.

More detailed guidance on this area can be found on HMRC’s website.