Capital Gain and foreign dividend - Use of exchange rates

Hi, I have a question regarding the use of exchange rate to calculate the capital gain tax and income tax relating to foreign dividend. I know it's free to choose the monthly rates, yearly average and spot rates quoted in HMRC website. I would like to know whether I can also use the daily spot rate quoted by Bank of England? For example: (1) I bought and sold shares of a US stock in both September 2022. Can I choose the daily spot rate by Bank of England for acquisition and the September 2022 monthly rate by HMRC for disposal? (2) Can I choose the October 2022 monthly rate for a foreign dividend received on 1st Oct 2022, while choosing the daily spot rate by Bank of England for another foreign dividend received on 20th Oct 2022. Many thanks!

Hi

You can also use the London closing rate, as would be reported on a daily basis, in national newspapers.  
The Bank of England publish spot rates against Sterling and other currencies, but the rates they publish are not official rates, so should not be used.  
The official rates are based on the London closing rate.

Thank you

Thanks for your reply. I am quite surprised the rate quoted by Bank of England cannot be used, instead, the daily rate quoted by the national newspapers can be used. May I clarify which national newspapers to which I can refer. For example, can I refer to the closing rate quoted by investing.com, which is a well-known financial website. Many thanks again!

Hi,

The Bank of England does not quote the closing rate from the London Stock Exchange, which is why it cannot be used.  

As long as the rate is the closing rate, it can be used. An example of this is a national newpaper, that is quoting the closing rate for the day before. You can also use the official exchange rates here:

Exchange rates from HMRC in CSV and XML format

Thank you.

Rather than posting a new, near identical question.... Can you build on this answer please? For historic exchange rates, it is impractical to suggest that we use a national newspaper. I don't happen to have one lying around from 1997, 2004, and 2010 which are the dates I need. I can get historic exchange rates (e.g. from Yahoo! Finance or OFX), but none of these sources specify if they are London closing rate. HMRC provided rates only go back to 2014 as far as I can see and are only weekly (so not strictly suitable for CGT purposes). It does not seem unreasonable that if HMRC set a rule for a specific exchange rate source to be used, that you indicate a practically available source for such rates.

Two days and no answer. Straightforward question....where do we get acceptable "official" rates for before 2018 since HMRC thinks it's a good idea to remove them from your website. There's no official definition fo "London closing" (not even within the Finance Act) and sources for historic exchange rates do not use this term. So what do we do?

Hi
You can get older dates at:
The National Archives

You've posted a general link to all HMRC content at the National Archives (NA). There is nothing there with exchange rate or similar terms in the title. Nevertheless, I had already found the following NA links from the Institute of Chartered Accountants in England and Wales site. Weekly rates only going back to 2011 https://webarchive.nationalarchives.gov.uk/ukgwa/20141006105738/http:/customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_RatesCodesTools Spot rates for March and December 1989-2014 https://webarchive.nationalarchives.gov.uk/ukgwa/20141203183220/http://www.hmrc.gov.uk/exrate/index.htm It is my understanding (from an accountancy source, I can find nothing in the HMRC CG manual) that calculations must use the actual day closing rate. So none of these rates would be suitable. If that is incorrect, could you confirm which of the rates (March and December spot rates) or weekly rates are acceptable for Capital Gains calculations. If it's correct, can you please go back to my original question and tell us where we get these mysterious official rates. Presumably HMRC has them otherwise you could not challenge a calculation which appeared to use incorrect rates.

Hi sb3502,
Exchange rates from HMRC in CSV and XML format
provides more recent exchange rates and
Exchange rates goes back to 1 January 1989.
It is not necessary for you to use the actual closing date exchange rate.
HMRC allows for the use of a monthly rate, annual average rate and two spot rates, as well as the actual daily closing rate.
 You are free to utilise the rate that gives you the better conversion.
Thank you. 

Thank-you. This is potentially very helpful. To close this off so that the answer is definitive, can you point to a Capital Gains Tax source that says that such average, monthly or spot rates can be used? The Finance Act does not say this and I could not find any guidance in the HMRC CG manual. It may be there and I just haven't found it. I suppose it could also have been resolved in case law at a tribunal, say. I am conscious that the devil is in the detail and, for example, permissible exchange rate usage differs between, say, foreign business profit calculation and capital gain calculation. I believe it is incumbent on me to avoid "careless" errors by ensuring that I follow an officially mandated approach. Alternatively, if it is the case that HMRC regards comments from HMRC staff here as being sufficient for this purpose, please let me know. Thank-you again for addressing the question. and can be relied upon in the context of complying with legislation and official guidance.

Hi sb3502,

There are approximately 167 currencies and country zones, besides Sterling.  
BIM39515 advises "Traders may use London closing rates when translating foreign currency amounts into sterling in their accounts.
Equally they may use other exchange rates, such as an exchange rate quoted by their bank, or the monthly average rates published by HMRC for VAT purposes.
You only need to query the rate of exchange used if, exceptionally, it diverges markedly from rates obtained from reputable sources of this nature".
 BIM39515 - Foreign exchange: exchange rate for tax purposes

Thank you.

Hi, Thank you for that reply, but I’d already read that, and it is not, as far as I can tell, applicable to capital gains. It is in the Business Income manual, not the Capital Gains manual, refers to “ S25 Income Tax (Trading and Other Income) Act 2005 and is specifically in relation to trading profits. The tax law and case law for foreign trading profits is different to that for Capital Gains. For example, a trading profit or loss is calculated completely in the foreign currency and only THEN converted to sterling. This is NOT permitted for capital gains which must use the exchange at the time the asset was acquired and the exchange rate at the time of disposal. I feel a bit daft spelling this out since you’re the experts, but it seems necessary as I’m still not getting a straight accurate answer to a straight question about how to comply with my tax obligations. It currently appears impossible, so I know I’m missing something . The earlier answer said that the March and December spot rates or other rates could be used. I simply asked for either a valid source for this statement. Regards, Stuart

Hi Please could you confirm where the yearly average exchange rates for the years 31 March 2011 to 31 March 2017 have been archived to? I am looking to access to the content I used previously and which Amazon AWS shows was available until 4 January 2018. The last yearly average on the national archive is to 31 March 2009: https://webarchive.nationalarchives.gov.uk/ukgwa/20100202124701/http://www.hmrc.gov.uk/exrate/yearly_rates.htm and the live HMRC data only goes back to 31 March 2018: https://www.gov.uk/government/publications/exchange-rates-for-customs-and-vat-yearly So, there is a gap for 31 March 2011 to 31 March 2017. Please could you confirm where the details of the intervening years are available? Many thanks and kind regards

[External link removed - HMRC Admin]

Hi sb3502,

The guidance on the term 'conderation' can be found at:

CG14500 - Consideration for disposal: meaning of consideration

For assets acquired or sold for currency, CG78310 gives HMRC position. 

CG78310 - Foreign currency: assets acquired or sold for currency

Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal, which is why there are several alternatives provided at:

HMRC exchange rates for 2023: monthly

Thank you.

Hi H@VPA,

The exchange rates provided by HMRC, can be found at:

Exchange rates from HMRC in CSV and XML format

For older exchange rates please see

The National Archives - Foreign exchange rates and spot rates: 1 January 1989 to 31 March 2009

The exchange rate is not set in stone, which is why you have a choice. Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal.

Thank you.

@HMRC Admin 32 - thank you for your reply but the links provided still have a gap between 31 March 2009 and 31 March 2018 - it is the interim period that has gone missing from publicly available records. It appears that .gov have removed years prior to 2018 from their website but not uploaded the content to the national archives. Are you able to raise this internally at HMRC please? Many thanks

You're now directly contradicting what other admins have said earlier in the thread, which is why taxpayers including myself need a definitive answer from you. i.e.... From earlier in this thread "The Bank of England does not quote the closing rate from the London Stock Exchange, which is why it cannot be used. As long as the rate is the closing rate, it can be used. An example of this is a national newpaper, that is quoting the closing rate for the day before. You can also use the official exchange rates here:" Now you're saying: "The exchange rate is not set in stone, which is why you have a choice. Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal." You talk about "official rates" earlier in this thread and in response to plenty of other questions. You still haven't provided a source for older "official" exchange rates nor any source stating that other "reasonable" sources of rates can be used as asserted above. When I ask for something to back up assertions here by HMRC that the monthly, yearly or March/Dec spot rates can be used, I get incorrect information relating to business taxation. Then you give two links neither of which specify the source or any details of acceptable exchange rates (they are instead about the nature of CGT calculations). You have also said above "Under the terms of Self Assessment, we do not provide an official exchange rate...." . So why do so many of the responses here and on other threads point to the HMRC "official rates" both on your own site and in the National Archives? If this statement is true, where in any official guidance does it say this? It doesn't appear that anyone from HMRC is able to address this question properly or avoid providing misleading or plain incorrect guidance here.

Hi,
Please see attached link with HMRC exchange rates.  
You can choose to use either
monthly or annual rates, whichever is more beneficial.
Exchange rates from HMRC in CSV and XML format
Thank you.

......so, 2 months to go full circle. Completely pointless exercise so I'll raise a complaint instead.

Hello again, all HMRC exchange rates have now been moved to the national archive (and apparently will no longer be updated) but none of the links work after 2009?! Please could you let us know how agents are supposed to find this information now? Kind regards H