Capital gain on foreign exchange trades

Hi HMRC I bought and sold USD against GBP in different foreign exchange rates a few times per month for the tax year 22/23. For calculation of the capital gain of these foreign exchange trade deals, can I: 1. match the buy and sell deal and calculate the gain based on my own preferred selection ? Or 2. Is the matching mechanism of "same day/ bed and breakfast rule / section 104 holding" applied to "foreign exchange" capital gains also? Thanks for your reply in advance!

Hi,
 

You can use either the exchange rate at the time of the axquisition & disposal or the average for the year.  You need to convert the amount to UK sterling prior to working out the gain.  HMRC exchange rates can be found at : Exchange rates from HMRC in CSV and XML format  .  Further guidance can be found at CG78310 : Capital Gains Manual     . Thank you.

Hi HMRC, I would like to clarify my question as follows: Please refer to below 5 foreign currency deals. I would like to calculate the GBP capital gain for the two sell trades done on 27 Jan 2023 but not sure how to do that. What is the mechanism to match the buy and sell deals so that the gain be calculated? Deal no. 1. 8 July 2022 Buy GBP10000 sell USD @ 1.19 (USD 11900) 2. 27 Jan 2023 Buy GBP10000 sell USD @1.22 (USD12200) 3. 27 Jan 2023 Sell GBP10000 buy USD @1.24 (USD12400) 4. 27 Jan 2023 Sell GBP10000 buy USD @1.24 (USD12400) 5. 31 Jan 2023 Buy GBP10000 sell USD@1.23 (USD12300) I suppose the calculation as: - same day matching, that is to match sell deal no. 3 against buy deal no.2 . So the gain is USD200 (then use average yearly rate to calculate the gain in GBP) - for the sell deal no.4 , shall it be matched against the buy deal no.1 or buy deal no. 5 to calculate the gain on disposal of GBP10000? Will bed and breakfast rule/ section 104 holding be applicable in this type of buy and sell currency transactions? Or in fact can I just match sell deal no.4 with buy deal no. 1 based on my own preference? Would appreciate your guidance on calculation for this. Thank you!

Hi HMRC administrator, I have a question following the thread. It is my understanding that foreign exchanges in foreign currency bank accounts should no longer give rise to chargeable gain under CG 78321 from 6 April 2012, unless the exchanges involve other types of investment in other currency-related assets. I therefore could not figure out why the author in the above case needs to work out and report the "gains" in the transactions. Most grateful for your enlightenment.

Hi mutmee,

All aspects of the capital gains calculations are performed using pounds sterling only. You would need to use the official exchange rate in opertation at the time of disposal, to work out your gain. You are free to use the average, spat rate or monthly rate.  

The rates can be found at:

HMRC exchange rates for 2023: monthly

Thank you.

Hi Muk LO

There may have been a different scenario presented in the other query. If your own particular scenario applies to cg78321 then no gain will be due if you meet the conditions specified.

Thank you.