Foreign income and gains from remittance basis years are still taxed if brought to the UK after 6 April 2025, so former remittance basis users still need the mixed fund rules in section 809Q ITA 2007. When an overseas account holds more than one kind of income or capital, or amounts from more than one tax year, a remittance is matched first with amounts designated under the temporary repatriation facility, then with the most recent tax year’s income and gains, working back year by year, with clean capital of each year taken last.

Why do the mixed fund rules still apply after April 2025?

The remittance basis ended with 2024 to 2025. Foreign income and gains that arose to a former remittance basis user before 6 April 2025 remain taxable at the usual rates if remitted on or after that date, unless designated under the temporary repatriation facility (RDRM30005). Most long standing offshore accounts contain a mixture of old income, gains, capital and, increasingly, income taxed since April 2025. The ordering rules in sections 809Q and 809R ITA 2007 decide what any transfer out of such an account represents (RDRM35210).

The rules do not apply to foreign income or gains that arose before 6 April 2008, which follow older rules (RDRM35210).

What counts as a mixed fund?

Under section 809Q(6), a mixed fund is money or other property which, immediately before a transfer, contains or derives from more than one of the kinds of income and capital listed in section 809Q(4), income or capital from more than one tax year, or TRF capital together with something else (RDRM35220). It is not limited to bank accounts. A house, a painting or a share portfolio bought with mixed money is itself a mixed fund, and so is any account funded from one.

Several separately constituted accounts at the same bank are not a mixed fund merely because they sit together, provided each holds only one kind of income or capital from one year. HMRC accepts that clean capital kept in its own account can be remitted without tax (RDRM35220).

In what order is money treated as leaving the fund?

Section 809Q(3) applies a series of steps to each transfer, using the composition of the fund immediately before it (RDRM35240):

  1. Step A1. TRF capital comes out first, whatever year it relates to and whenever it was designated.
  2. Steps 1 to 4. For the tax year of the transfer, the remainder is matched against nine categories in order: (a) employment income not subject to foreign tax, (b) relevant foreign earnings, (c) foreign specific employment income, (d) relevant foreign income, (e) foreign chargeable gains, (f) employment income subject to foreign tax, (g) relevant foreign income subject to foreign tax, (h) foreign gains subject to foreign tax, and (i) anything else, including UK income and gains and capital.
  3. Step 5. If anything is left, the same categories are applied to the previous tax year, and so on backwards.

The effect is last in, first out by tax year, with untaxed income before untaxed gains, both before foreign taxed amounts, and capital last within each year. A taxpayer cannot simply say a remittance came from capital (RDRM35240). Each transfer is matched separately, transaction by transaction, unless the annualised basis described below applies.

Where does income taxed after April 2025 fit?

Income and gains arising from 2025 to 2026 onwards are taxed as they arise, whether or not they are brought in. When they are paid into an old offshore account they belong to a later tax year, so the last in, first out rule matches them first, after any TRF capital. HMRC’s examples in RDRM75200 and RDRM35340 show a 2026 to 2027 taxed dividend and a taxed gain being treated as remitted before untaxed income from 2023 to 2024. Because those amounts have already been taxed, remitting them creates no further charge, but they also do nothing to clean the older amounts behind them.

What happens when money moves between overseas accounts or is spent abroad?

A transfer that is not a remittance, such as moving money to another overseas account or buying something abroad, is an offshore transfer under section 809R. It takes a proportionate slice of every kind of income and capital in the fund (RDRM35420). Opening a new account does not separate income from capital: both accounts carry the same proportions. An asset bought from the fund carries the income and gains used to buy it, and its sale proceeds are not fresh capital.

How does the temporary repatriation facility change the order?

Designating amounts under the facility for 2025 to 2026, 2026 to 2027 or 2027 to 2028 turns them into TRF capital, which is remitted before anything else (RDRM75100). A designation can make an account a mixed fund that was not one before. During those three years, a mixed fund that holds TRF capital at any time in the year uses an annualised basis under section 809RZZA: transfers to a TRF capital account, then all remittances, then all other transfers are each treated as a single transfer at the end of the year (RDRM75500). Because a designation takes effect from the start of the tax year, remittances can be reviewed and designated when the return is prepared. The basis ends on 6 April 2028, after which matching reverts to transaction by transaction.

The special mixed fund rules for overseas workday relief ended on 6 April 2025, and former qualifying accounts are now ordinary mixed funds (RDRM75100).

What does this look like in practice?

Illustration only. On 6 April 2026 Priya, a former remittance basis user, has one overseas account holding £40,000 inherited in 2016 to 2017, £60,000 of untaxed foreign interest from 2023 to 2024 and £30,000 of untaxed foreign gains from 2022 to 2023. She has made no designations. In June 2026 a £20,000 foreign dividend, taxed on the arising basis for 2026 to 2027, is paid in. In January 2027 she remits £50,000.

  • The first £20,000 is the 2026 to 2027 dividend, already taxed.
  • There is nothing for 2025 to 2026 or 2024 to 2025.
  • The next £30,000 is 2023 to 2024 foreign interest, taxable as a remittance in 2026 to 2027 at her income tax rates.

The inheritance is not reached. Priya could instead designate the £30,000 of interest on her 2026 to 2027 return and pay the 12% TRF charge on it (RDRM73400). Had she kept the inheritance in a separate account, she could have remitted from that account with no tax at all.

What mistakes come up most often?

  • Assuming post 2025 deposits sit behind older income. They are matched first and do not shield anything.
  • Moving money between offshore accounts to separate capital from income. The offshore transfer rule spreads every component proportionately.
  • Paying UK bills from an overseas card linked to a mixed account. Using foreign money for services in the UK is a remittance.
  • Keeping poor records. HMRC expects precise accounting of what entered and left each fund, when and where (RDRM35210).
  • Forgetting that assets bought from a mixed fund remain mixed funds, which also affects proceeds from assets that qualify for rebasing to April 2017.

For how domicile and residence now interact more generally, see is domicile still relevant for UK tax and the four year foreign income and gains regime.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.