Britain offers a cheap way to bring the money home. America is not part of the deal

Figures relate to tax year 2025-26 (UK) · 2025 (US)

For years the advice was simple. Leave the money offshore, never bring it into Britain, and the remittance basis keeps it out of the British tax net.

That regime has gone, and Britain has opened a window to clear the backlog. The repatriation facility lets former non-doms designate old foreign income and gains and pay a reduced British rate on them. If you also file an American return, the arithmetic only half works.

Key takeaways

• The repatriation facility taxes designated pre-reform foreign income and gains at a reduced rate.
• It runs for a limited window, so the decision cannot wait indefinitely.
• Once designated, the money can be brought into Britain without a further charge.
• America never had a remittance basis, so it taxed most of this income already.
• A British charge now may produce no American credit, because the years differ.
• Run both calculations before designating anything.

What is the temporary repatriation facility?

It is a time-limited British option to pay tax at a reduced rate on foreign income and gains that arose before the reforms. You designate the amounts, you pay the charge, and the money then becomes clean for remittance purposes. According to HMRC guidance, designated amounts can be brought to Britain afterwards without a further charge.

The repatriation facility exists because the old remittance basis left large sums stranded offshore.

So it is a clearing exercise rather than a new relief. Britain wants the backlog settled.

Who can use it?

People who claimed the remittance basis in earlier years and still hold foreign income or gains from those years. The repatriation facility looks backwards at amounts that arose before the reform, not at income arising now. So it suits somebody with an old offshore account they have never touched.

It does not help with income arising today, which follows the new rules.

Our guide to the FIG regime for arriving Americans covers the new system for newcomers.

Why does it matter to US citizens?

Because America never recognised the remittance basis in the first place. A US citizen living in Britain was taxed by America on worldwide income as it arose, whether or not a penny reached these shores. So the money sitting offshore was usually taxed in America years ago.

That is the crux of it. Britain is offering a discount on a charge America already collected.

We see people assume the repatriation facility is a bargain without checking that second half.

Does the American credit system help?

Less than you would hope, because of timing. A foreign tax credit generally matches foreign tax against foreign income in the same year, and here the British charge falls now while the income arose years ago. Credits can carry back one year and forward ten, which rarely reaches far enough.

The basket rules add a second obstacle. The income and the tax must sit in the same category.

Our guide to Form 1116 income baskets explains why that matters so much here.

A worked example

The figures below are illustrative and use round numbers to show the mechanics.

Claire, an American who has lived in London for fifteen years, holds £600,000 of old foreign income offshore. She claimed the remittance basis for a decade and reported the same income to America each year as it arose.

Designating the full amount costs her a reduced British charge. That is real money leaving her account now.

Against it she has no matching American income this year, because America taxed the income long ago. So the British charge may produce no usable credit at all, and she pays twice on the same money across two decades.

The British and American views compared

Is it ever worth doing anyway?

Often yes, and the reason is simple. Without designation the old money stays trapped, because remitting it later can trigger the full British rate rather than the reduced one. A charge you can plan for usually beats one you cannot.

It also ends the record-keeping. Tracking clean and mixed funds across decades costs real money in professional fees.

So the question is not whether the repatriation facility is free. It is whether the alternative costs more.

What if you never claimed the remittance basis?

Then the repatriation facility has nothing to work on. Somebody taxed on the arising basis throughout has already paid British tax on that income, so there is no stranded pot to designate and no discount to claim.

Most Americans in Britain fall into this group, because claiming the remittance basis often cost more than it saved.

Check the earlier returns before assuming either way. People forget which basis they used.

Does it affect your American reporting?

The designation itself is a British act, so no American form records it directly. But moving large sums between accounts can change what you report on your foreign account and asset disclosures, and a new account opened to receive the money needs adding.

Balances peak during transfers. Those peaks feed the reporting thresholds.

So plan the transfers with the reporting in mind rather than afterwards.

What about gains rather than income?

The same logic applies with one extra wrinkle. America taxed foreign gains as they were realised, often at long term rates, while the British charge now applies at the designated rate to the whole amount. The rates differ enough to change the answer.

Mixed funds make it harder still. Old accounts rarely separate income from gains cleanly.

Get the account history reconstructed before designating. Guessing the split is expensive.

What records will you need?

Statements going back to the first year you claimed the remittance basis. You need to show what arose in each year, what has been remitted since, and what remains. Banks rarely keep more than six years, so start the requests early.

Your old British returns show which basis you claimed. Your old American returns show what was already taxed there.

Put the two side by side. That single comparison drives the whole decision.

Does the money have to come to Britain?

No. Designation and remittance are separate steps, so you can pay the charge now and leave the funds abroad indefinitely. The point of designating is that the money becomes clean, not that it has to move.

That flexibility suits anyone unsure about staying in Britain long term.

But the charge is still payable now. Designating costs cash whether the money moves or not.

What if you plan to leave Britain?

Then think carefully before paying anything. Someone who expects to become non-resident soon may never remit the money at all, which makes the reduced charge a cost with no benefit attached.

Weigh how likely the move really is. Plans change, and the window will not reopen.

Americans face this question differently, because the American filing follows them wherever they go.

How to work out your position

1. Confirm which years you claimed the remittance basis in Britain.
2. Identify the foreign income and gains still held offshore from those years.
3. Check whether your American returns already reported that income.
4. Work out the British charge on designating each tranche.
5. Test whether any American credit is realistically available for it.
6. Compare that with the cost of leaving the money where it is.
7. Decide how much to designate, and diarise the window.

Who should you take advice from?

Somebody who files on both sides. A British adviser will price the designation correctly and may never ask what America already taxed. An American preparer will see the credit problem and may not know the British window at all.

One person needs to hold both halves of the sum.

Otherwise you get two confident answers that do not add up.

Can you designate only part of it?

Yes, and that flexibility matters. You can designate a tranche rather than the whole pot, which lets you bring home what you actually need while leaving the rest alone. Spreading designations across the window can also smooth the cash cost.

But the window closes, so the remainder loses the reduced rate afterwards.

Work out what you realistically need in Britain over the next decade. Then designate to that figure.

Does a spouse change the sums?

It can, particularly where one spouse is American and the other is not. The non-American spouse faces only the British side, so their share of any joint pot carries none of the double charge. Ownership of the underlying accounts therefore matters a great deal.

Review who owns what before designating anything.

Joint accounts need unpicking first. Britain looks at who owns the underlying funds, not whose name sits on the statement.

Changing ownership now has its own consequences. Take advice rather than moving money first.

How does it interact with the new regime?

They cover different periods, so the two rarely collide. The repatriation facility deals with income and gains from the old years, while income arising now follows the current rules for new arrivals and long-term residents.

But both can apply to the same person in the same year. Somebody recently arrived may use one while clearing the other.

Keep the two calculations separate on paper. Mixing them is how errors creep in.

Does it change your British filing?

Yes. Designation happens through your self assessment return, so the claim and the charge both appear there. That makes the filing deadline the real deadline, rather than some separate application date sitting elsewhere in the calendar.

Leave time for the account reconstruction before that date.

Amendments are possible but awkward. Better to get the figure right first time.

Mistakes and penalties we see with the repatriation facility

The first is treating the reduced rate as a bargain without checking the American side. For a dual filer it is often a second charge on old income.

The second is designating the whole pot when a tranche would do. That brings forward tax on money nobody needs in Britain.

The third is missing the window entirely. Once it shuts, the old money reverts to the full rate on remittance.

The fourth is forgetting the account reporting when the money moves. That is where the penalties actually live.

How US UK Tax Accountants helps

We reconstruct which years used the remittance basis, match the offshore pot against what your American returns already reported, and price the designation on both sides. Then we tell you how much to designate and when.

We also handle the account disclosures that follow the transfers. Our treaty relief service covers the credit analysis.

If you hold old offshore income and file in America, get in touch. The window is finite and the sums do not improve by waiting.

Last reviewed 25 September 2026. This article is general information and not personal tax advice. Every position turns on its own facts, so take advice on yours before designating anything.