Income Tax Act 2007 section 809Q

Sections 809L and 809P: transfers from mixed funds

Section 809Q sets out the rules for determining how transfers from mixed funds are analysed for remittance basis purposes, including the ordering rules that dictate which types of income or capital are treated as remitted first, and introduces the concept of TRF capital.

• When property brought to the UK, or used to pay for services enjoyed in the UK, originates from a mixed fund, the transfer must be analysed to determine how much taxable income or chargeable gains it contains
• A strict ordering rule applies: the transfer is matched first against TRF capital (which is exempt), then against categories of income and capital for the current tax year in a prescribed priority order, starting with employment income and ending with income or capital not in any other category
• If the transfer exceeds all amounts for the current tax year, the process rolls back year by year to earlier tax years until the full transfer amount has been allocated
• From 2025/26 onwards, designated qualifying overseas capital (TRF capital) sitting in a mixed fund is stripped out first before the standard ordering rules are applied to the remainder of the transfer

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