Gain on foreign currency bank account

Gain on foreign currency bank account

Didn't find your answer?

If expat returns to UK to resume UK residence and has a $ bank account with net surplus from salary less living expenses when overseas, plus share sale proceeds, how are the currency gains calculated when part withdrwals are made in the UK to spend in £ ?
Martin Cheyne

Replies (6)

Please login or register to join the discussion.

avatar
By Paul Soper
26th Jun 2006 13:12

So is the one before this one.
Foreign currency balances acquired for personal use ARE EXEMPT - see s252 and s269 TCGA - always beware the authorative answer given without section numbers!

Don't worry David its not too late to amend last year's returns but I'm afraid you're going to have to make error or mistake claims for your clients for earlier years.

Thanks (0)
avatar
By User deleted
26th Jun 2006 14:10

On the other hand...
...Section 269 doesn't apply to remuneration etc. received in a foreign currency.

See the Capital Gains Tax Manual, Section 78315.

David is right.

Thanks (0)
avatar
By wdr
26th Jun 2006 14:57

Sorry chaps, but the Revenue have their own views of what 'acqu
see CG Manuals , para 78315
"A gain on the disposal of currency acquired by INDIVIDUALS for the personal expenditure outside the United Kingdom of themselves and their family or dependents is not a chargeable gain. This includes expenditure on the provision or maintenance of a residence outside the United Kingdom.

TCGA92/S269 applies only to currency which was specifically acquired for personal expenditure of this kind. If REMUNERATION, interest, dividends or other sums are received in foreign currency, that currency was not acquired for the purposes specified in Section 269."

That doesn't mean their opinion is right-in particular their gloss adding the word 'specifically' which is not to be found in the legislation, but David Treitel was probaly nearer the answer than others.

Thanks (0)
Euan's picture
By Euan MacLennan
24th Jun 2006 16:35

Why do you want to know?
Exchange gains arising on overseas bank accounts are not subject to UK income tax or CGT and do not need to be reported on a UK personal tax return. The expat can transfer whatever he likes back to the UK without any tax consequences.

All you need to disclose is the interest earned on the bank account, if any, from the date the expat resumed UK residence, converted either at the current rate when the interest was credited or an average for the tax year.

Thanks (0)
avatar
By AnonymousUser
26th Jun 2006 17:33

The legal authority for calculating the gain ...
... is Bentley v Pike, for what it's worth but certainly could be a real drag but the identification rules for fungible assets are like shares i.e. basically LIFO, which may make things slightly easier.

Thanks (0)
avatar
By User deleted
26th Jun 2006 18:30

Calculation on LIFO

I agree with David if funds in $ account are accumulated from savings and share sale then no exemption as currency is not for personal expenditure.

Has anyone experience of submitting calculation of the currency gains or queries from HMRC ? Are we saying that each withdrawal converting $ to £ requires ( disposal )to be matched LIFO with the most recent deposit( acquisotion)in $ which is converted to £ at that time to calculate the currency gain difference to be taxed ?

HMRC would appear to accept a netting off of transactions per month where there are a lot of transactions.

Thanks (0)