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Posted Fri, 22 Apr 2022 08:54:55 GMT by burnsey220
Hi please can you help. I have an existing USD investment (currently slight gains) that I wish to convert to GBP and reinvest in GBP. The monies invested were earned whilst I was a non UK tax resident and were held in cash when I arrived in the UK. I have since invested the monies in USD but now wish to convert these monies to GBP. Understanding CGT is applied to the gain on the investment but what about the FX? If it is applied to the FX how does this get calculated? Thanks
Posted Wed, 27 Apr 2022 15:38:15 GMT by HMRC Admin 10

Please note that foreign currency is an asset for capital gains tax purposes.
The disposal of foreign currency may therefore give rise to chargeable gains or allowable losses.
Foreign currency is a fungible asset and therefore separate acquisitions of the same currency at different times must be pooled in the same way as shares or securities of the same class.
The guidance below explains the share identification rules.
Definitions: meaning of ‘security’ and ‘securities’ 
Shares and securities: share identification rules
Posted Thu, 28 Apr 2022 11:11:02 GMT by burnsey220
Thank you I understand the disposal of the foreign currency is chargeable to CGT. I was previously living and working overseas which is where this money was earned. If the foreign currency was held in cash before I became UK tax resident is the gain or loss calculated at the point I become a UK tax resident? or is it from the time I invested the monies into a share portfolio (knowing that this is a separate CGT element on the investment part) Appreciate your reply
Posted Wed, 04 May 2022 13:03:55 GMT by HMRC Admin 19

For a capital gain to arise on currency, there has to be a disposal. No gain would arise simply as a result of you becoming resident in the UK. A gain may however have arisen as a result of your investment in the share portfolio.

You can see further guidance here: 

CG78300 - Foreign currency: introduction 

CG78310 - Foreign currency: assets acquired or sold for currency

Thank you.
Posted Thu, 05 May 2022 05:03:00 GMT by burnsey220
I fully understand there would be CGT liable on any gain/loss on the share portfolio but how do I calculate the gain on the disposal of the currency. I know the buy/sell point on the investment but how do you calculate the gain/loss on the currency? What exchange rate do I use and what is the start point for the currency given I already had the USD cash on deposit when I returned to the UK. Is the exchange rate on the acquisition date of the shares used as the start point when assessing the gain/loss in the currency? Thank you

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