It is now June 2025, and the UK's sweeping reforms to its tax regime for non-domiciled individuals have officially come into force. As anticipated, many long-term UK residents with non-dom status have chosen to relocate in search of more favourable regimes. But in a striking and somewhat unexpected development, the UK's Temporary Repatriation Facility (TRF); introduced as part of its new Foreign Income and Gains (FIG) regime; has sparked interest among a different audience – wealthy US individuals.
Designed as a transitional relief, the TRF provides a unique, time-limited opportunity to repatriate previously unremitted foreign income and gains to the UK at a reduced tax rate. For US citizens, who are already taxed on their worldwide income, this relief offers not just a strategic entry point into the UK, but a broader opportunity for holistic, long-term wealth planning.
This article explores why the TRF appeals specifically to US persons, how offshore structures – particularly in jurisdictions like the Isle of Man – can enhance this planning, and how such structures can serve long-term objectives regardless of where clients ultimately reside.
The End of the UK Non-Dom Regime and the TRF in Action
With the non-dom regime now abolished, the UK's new approach to taxing foreign income and gains has fundamentally altered the planning landscape. As of April 2025:
- all UK residents are now taxed on their worldwide income and gains;
- new arrivals to the UK may benefit from a 4-year exemption on foreign income and gains; and
- the TRF offers a 3-year window (2025–2028) for individuals who previously claimed the remittance basis to remit historic foreign income and gains. These will be taxed at a favourable 12% flat rate in the 2025/26 and 2026/27 tax years, rising to 15% in 2027/28.
This mechanism is not just a transitional tool – it is a powerful incentive. For US clients in particular, it offers a way to clean up historic offshore positions in a cost-efficient manner.
Interestingly, the timing of this relief coincides with the remainder of President Trump's current term in office, a factor not lost on politically and economically aware US families looking to hedge their options and explore international relocation strategies.
Why does the TRF Appeal to US Clients?
The Global Tax Alignment
US citizens and residents are subject to global taxation by the IRS, regardless of their residence. The traditional UK remittance basis had little appeal to them, but now that the UK offers a time-limited, low-rate repatriation scheme, they see an opportunity:
- The 12% or 15% UK tax under the TRF can be creditable against US tax liabilities.
- Previously trapped offshore funds can be brought into the UK at a discount, simplifying reporting and liquidity.
Strategic Timing
For Americans planning to relocate to the UK temporarily for business, education, or family reasons, the TRF provides a cost-effective way to realign wealth with their new residence, as:
- funds can be remitted for lifestyle, investment, or family office needs; and
- the 3-year window allows for coordinated asset restructuring.
A Cultural and Lifestyle Draw
Beyond tax, the UK remains attractive for US families seeking elite education, cultural access, or European proximity. The TRF acts as a financial enabler for those wishing to relocate without enduring prohibitive tax exposure.
The Role of Offshore Structures in TRF Planning
Effective use of the TRF hinges on strategic structuring. Offshore entities and trusts play a central role.
Trusts for Timing and Distribution:
- Trusts established before UK residence or amended during the TRF window can distribute funds efficiently.
- Distributions timed within the TRF window reduce long-term UK tax exposure.
Dual-Reporting Solutions:
- Structures must navigate both US (IRS) and UK (HMRC) tax compliance, including CFC and PFIC rules.
- Thoughtfully designed entities can provide flexibility while avoiding double taxation pitfalls.
Legacy and Exit Planning:
- For US clients who intend to return to the US, offshore structures allow for continued global asset management outside both UK and US estates.
- Succession, philanthropy, and asset protection strategies can be embedded at the outset.
The Isle of Man as a Strategic Partner
The Isle of Man offers a stable, sophisticated, and tax-neutral environment ideally suited to supporting US/UK cross-border wealth planning. It has:
- no capital gains tax, inheritance tax, or wealth tax;
- proven expertise in managing dual-reporting structures;
- a strong trustee ecosystem, including private trust companies and family office solutions; and
- a robust legal framework that offers flexibility and predictability.
By leveraging Isle of Man structures, US clients can enhance the benefits of the TRF, create compliant and efficient wealth frameworks, and position themselves for flexibility no matter how their life or residence evolves.
Conclusion
The UK tax reforms may have closed the door on long-standing non-dom privileges, but they have opened new windows of opportunity, especially for globally minded US individuals.
The TRF represents one of the most significant cross-border planning moments in recent memory, which when combined with thoughtful offshore structuring, allows US clients to reposition wealth, optimise tax exposure, and future-proof their global planning – whether they are settling in the UK temporarily, permanently, or simply passing through.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
