Capital Gain Tax

Hi, if I use Hong Kong dollars to buy GBP and then sell GBP for exchange for a larger sum of Hong Kong dollars under a more favorable exchange rate, all done through my bank account, is the increase in the amount of of Hong Kong dollars following the above transactions subject to capital gain tax? I am not employed and have no income other then interest earned in my bank accounts and the amount does not reach the threshold for tax payment. In that case, do I still need to complete and submit self-assessment for tax return? Thank you.

Hi BPS WONG,

We have limited information in the question, which makes it difficult to reply to.

 Please see Capital Gains (CG) mauual 78320 and CG78321 which gives information on this and states that whilst the currency held in there is treated as an asset, these accounts are now

dealt with like a simple debt and so in themselves give rise to no gain or loss.

CG78315 also advises that where a individuals is simply buying currency for personal use there will also be no chargeable gain.

However, where a individuals is using his foreign currency account to buy and sell non-sterling currency (in this case HKD) in order to make gains, then as currency is

lassed as an asset as per CG78300.

 Any disposals made could give rise to a chargeable gain for CGT purposes.

CG78320 - Foreign currency: foreign currency bank accounts - introduction

CG78321 - Foreign currency: foreign currency bank accounts - periods from 6 April 2012

CG78300 - Foreign currency: introduction

Thank you. 

Hi HMRC administrator, Many thanks for your reply. I have gone through the references you provided above. Regarding CG78300 which you mentioned, I note that the chargeable tax for profits gain apply for such kind of transactions up to 5 April 2012. In my case, the transactions were made after that date and the exchanges of currencies did not involve the investment in any other currency related assets like shares. Based on the above, should there be any profits tax chargeable in my case ? Please kindly let me know if you need any further information from me for your further advice. Thank you.

Hi,

For the period after 6 April 2012, please refer to:

CG78321 - Foreign currency: foreign currency bank accounts - periods from 6 April 2012

Thank you.