Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Thu, 27 Oct 2022 21:39:57 GMT by connectiondue
Hi there If I have NRE fixed deposit in INR India which gets matured and capital plus interest paid on maturity and then immediately I call that money back into my UK bank account, although I have earned interest but when I call money back to uk I made a loss due to exchange rate, do I have to pay tax on interest and then claim exchange loss ?
Posted Tue, 01 Nov 2022 13:48:59 GMT by HMRC Admin 17

You cannot claim the cost of converting currency as an expense. 

You pay tax on the interest arising fromn the capital, that you have converted to pounds sterling.

Thank you.
Posted Tue, 01 Nov 2022 17:09:04 GMT by connectiondue
Many thanks for the response, I am still not clear can you help me on below example please? Example: I sent 5000 GBP to my NRE in Apr 2021, the exchange rate was 101, this means I received INR 505,000 in my NRE account in India In 12 months, I earned interest of 15150 on this base amount of 505,000 In April 2022, the exchange rate was 108 and called all money back to UK (base INR 505,000 + INR 15150 interest) total INR 520150 I received GBP 4816 in my UK account (520150/exchange rate of 108) in this scenario, my actual investment was GBP 5000 and I received GBP 4816, resulting in loss of GBP 184 Can you confirm: since I have made a loss, do I still need to pay tax on interest? why would I need to pay tax on interest if I made the loss in above scenario, can you explain this to me please? if I pay tax on my interest, can I claim capital loss ? Since the value of my actual investment is reduced by 184 pounds? many thanks in advance! regards
Posted Fri, 04 Nov 2022 12:33:07 GMT by HMRC Admin 10
We are unable to comment on hypothetical or actual scenarios.
Posted Fri, 04 Nov 2022 13:14:35 GMT by connectiondue
hello dear - sorry I am new to Hmrc customer forms and did not knew about this. for my help, can you confirm what kind of questions I can ask and HMRC admins can answer on customer forums please? Can I ask about my actual situation and share details and then you can answer? also, for my actual situation, if you are not the right team to answer, is there any other HMRC helpline that help please? many thanks
Posted Wed, 09 Nov 2022 12:14:16 GMT by HMRC Admin 32

We can only offer general guidance and give links to tax subjects that you need help with.

Thank you.
Posted Mon, 14 Nov 2022 19:59:29 GMT by connectiondue
Hello dear Hmrc admin 32 - Can you confirm why I cannot claim the cost of converting currency as an expense? If I make a loss in exchange rate when calling the capital and interest back to uk, if I need to pay tax on my interest then why cannot I claim capital loss or expense for the exchange rate loss ? Thank you
Posted Wed, 16 Nov 2022 12:51:18 GMT by HMRC Admin 17

You choose the rate of exchange to use, either the annual HMRC rate or the rate on the date of transaction. 

There is guidance at RDRM31190:

Residence, Domicile and Remittance Basis Manual  .

Thank you.
Posted Wed, 16 Nov 2022 13:21:04 GMT by connectiondue
Hello dear - yes I understand on what Exhange rate to use My query relates to the loss made while calling the deposit and interest back to UK Can I claim exhange loss and deduct from my interest earnings ? If not, why ? Can you send the Link for this detail please ? Thank you
Posted Fri, 18 Nov 2022 15:14:45 GMT by HMRC Admin 2

No deduction can be given for currency exchange.

EIM40033 - Earnings paid in foreign currency

Thank you.
Posted Mon, 05 Dec 2022 21:41:28 GMT by connectiondue
thank you hmrc admin2

You must be signed in to post in this forum.