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tboy

Tax Self Assessment - Foreign Currency Accounts

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Maybe not posting this in the right area but the OT crowd usually know their stuff...

...it's coming up to that time to get my Tax Self Assessment in just before the deadline, and I have a question on my foreign currency bank accounts (I'm UK citizen/UK tax etc, I just have some accounts in $/€ at the bank)...I get paid interest on them, but HMRC website is not clear how I report that on my tax return. If I do have to, can I pretty much choose any reasonable FX rate I want to convert it back to Sterling?

Also, some people have muttered I should pay capital gains tax (if applicable) on foreign currency trades, 1) is this correct 2) this would be massively complicated as I move different amounts across different currencies all the time?

Thanks all....numbers aren't exactly huge but just want to get the right.

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Maybe not posting this in the right area but the OT crowd usually know their stuff...

...it's coming up to that time to get my Tax Self Assessment in just before the deadline, and I have a question on my foreign currency bank accounts (I'm UK citizen/UK tax etc, I just have some accounts in $/€ at the bank)...I get paid interest on them, but HMRC website is not clear how I report that on my tax return. If I do have to, can I pretty much choose any reasonable FX rate I want to convert it back to Sterling?

Also, some people have muttered I should pay capital gains tax (if applicable) on foreign currency trades, 1) is this correct 2) this would be massively complicated as I move different amounts across different currencies all the time?

Thanks all....numbers aren't exactly huge but just want to get the right.

For any income received in a foreign currency, you can either use the exchange rate on the day you received the income, taken from a reputable source such as the Financial Times, or use the average exchange rates published by HMRC at http://www.hmrc.gov.uk/exrate/index.htm .

Foreign currency held for personal use is not subject to Capital Gains Tax, see http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm . This also means you can't get tax relief for any loses you make on foreign currency, and due to the margins you pay on conversion, you are slightly more likely to make a loss than a gain.

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For any income received in a foreign currency, you can either use the exchange rate on the day you received the income, taken from a reputable source such as the Financial Times, or use the average exchange rates published by HMRC at http://www.hmrc.gov.uk/exrate/index.htm .

Foreign currency held for personal use is not subject to Capital Gains Tax, see http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm . This also means you can't get tax relief for any loses you make on foreign currency, and due to the margins you pay on conversion, you are slightly more likely to make a loss than a gain.

Very useful thanks...I went with the average rate to save faffing with when I got it. Tax return all complete now! Did kinda have to ignore the Capital Gains Tax bit, I'll go back and check bank statements (annoyingly only 3 months available online and I threw multi-years of them away just the other week)....suspect I might owe Cap Gains Tax at some point over the last 2-3 years, better get round to checking it. Didn't realise this was the case, back to doing all my FX trading through spread-betting I guess...

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Very useful thanks...I went with the average rate to save faffing with when I got it. Tax return all complete now! Did kinda have to ignore the Capital Gains Tax bit, I'll go back and check bank statements (annoyingly only 3 months available online and I threw multi-years of them away just the other week)....suspect I might owe Cap Gains Tax at some point over the last 2-3 years, better get round to checking it. Didn't realise this was the case, back to doing all my FX trading through spread-betting I guess...

Personal use means not for business use. If you are running a business and have a foreign currency account to receive money from customers or pay suppliers, then any change in currency value forms part of your business profit. As I said before, forex speculation is a zero sum game, and you are slightly more likeloy to make a loss than a profit due to charges. That's why it is exempt. Just like if you make a profit selling your car, it is tax free, because hmrc is happy to forego the occasional tax receipt there in exchange for not having lots of loss relief claims for the times when people sell their car for less than they paid for it.

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Personal use means not for business use. If you are running a business and have a foreign currency account to receive money from customers or pay suppliers, then any change in currency value forms part of your business profit. As I said before, forex speculation is a zero sum game, and you are slightly more likeloy to make a loss than a profit due to charges. That's why it is exempt. Just like if you make a profit selling your car, it is tax free, because hmrc is happy to forego the occasional tax receipt there in exchange for not having lots of loss relief claims for the times when people sell their car for less than they paid for it.

In the UK you are.... as I've said many times the UK is nuts.... you seem to enjoy 1-15% commission rates even at big commercial places.... over in Asia people will not pay more than 0.3% commission some places charge even less. It isn't a overheads issue either. I can get 0.07% commission change in Wanchai possible THE most expensive bit of land in HK.

Much like you guys all love high rents, again in Asia more than 1/5th of take home pay is considered to be high.

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For any income received in a foreign currency, you can either use the exchange rate on the day you received the income,

Define income. If your shares rise in value, you are not taxed on that rise, and presumably refunded when they fall. You are taxed only when you come to sell them. Likewise if you make a gain on foreign currency. If you have a foreign currency account and the sum in it increases, you have not made any gain until you transfer it back to pounds, selling it.

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For foreign currency interest I used to use the exchange rate on April 5th (or whatever day the end of the tax year is); they never questioned it. I did put the amount and exchange rate down too just in case they did decide to check.

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You are supposed to declare everything on a tax assessment form. That includes any income over £5 whether it be in interest from a bank account or income from flogging crap at a car boot sale.

Your savings in foreign accounts are irrelevant if that is what they are but it would be reasonable to calculate what the interest paid is in sterling by using the high street/bank rate. Personally I wouldnt bother, if they find it then they will let you know anyway and you can easily say that you didnt think that they counted since there is no guidance as to how you would include foreign currency.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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