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Posted Wed, 15 Sep 2021 22:19:50 GMT by Alex Pun
Hello, I have some leftover foreign currencies in my brokerage account. (due to not buying maximum possible amount of shares after currency conversion and/or due to dividends) Is the gain or loss due to fx movement against GBP taxable (and loss deductible) with respect to these cash?
Posted Fri, 17 Sep 2021 07:43:47 GMT by HMRC Admin 19

Currency other than sterling is a chargeable asset, and its disposal can give rise to a chargeable gain or allowable loss.. Please see the following:

Capital Gains Manual

Thank you.
Posted Fri, 17 Sep 2021 18:57:43 GMT by Alex Pun
Thanks for answering, May I ask what count as disposal of the foreign currency? Is any event that cause a reduction of the balance count as a disposal? For example: A service fee charged deducted by my broker Withdrawal to a bank account Buying some other securities It seems that the calculation is potentially complex for little or no tax. Say 20 companies were paying foreign dividends and the broker charge a £2fee every month in Japanese yen.
Posted Tue, 21 Sep 2021 14:20:42 GMT by HMRC Admin 2

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.

Apart from the sale of foreign currency for sterling, there is also a disposal if foreign currency is used to purchase an asset.

Please see CG78300P, which includes the treatment of foreign currency bank accounts.

CG78300P - Capital Gains Manual: Chattels and other assets: Foreign currency: contents

One further point to note is that foreign currency is a fungible asset (fungible assets are ones which it is not possible to identify individually in a holding of more than one because they are functionally identical) and thus separate acquisitions of the same currency at different times, must be pooled in the same way as shares of the same class.

CG11820 - Shares and securities: share identification rules

Thank you.

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