Exchange Rate for Foreign Income

Dear HMRC, Regarding foreign exchange rate used to convert foreign income into GBP. 1. Instead of using the HMRC published monthly spot rate, monthly average rate and annual average rate , can I use a daily spot rate quoted from Bank of England website based on the date of the transaction? 2. Amongst all the various rates I can use, am I free to use different rates for different income entries? e.g. for May 10th dividend I use the monthly rate, for May 12th dividend, I use the annual rate, for Jun 30th saving interest I used monthly rate again? 3. For Annual rate, using 2022/23 tax year for example, am I correct to say I can choose between Dec'22 Annual Rates, as well as Mar'23 Annual Rates? Thanks

Hi

The answer is yes in all three cases.

Thank you.

Dear HMRC Thanks. I am unsure about the cutoff date when choosing which March Spot rates are applicable. For example, transaction on Mar 31 2021 would make use of Mar’21 spot rate instead of Mar’22 spot rate. But what about 1 day later on Apr 1 2021? Is the cut off Mar 31, meaning it should refer to Mar’22 Spot rate? Or is the cut off on Apr 5 (end of tax year), which means an Apr 1, 2021 transaction should still refer to the Mar’21 spot rate instead of the Mar’22 spot rate? Thanks

Hi,
The spot rates recorded on 31 December and 31 March, are the real-time price at which you can exchange one currency for another and are London closing rates.  
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.  
As long as the spot rate applies to the tax year in question, there is no preference as to which is used:
Foreign exchange: rates of exchange
Thank you.

Dear Sir, As per my understanding, I am free to use the March 2022 average rate, even the income dated Dec 2022, is it right? Best regards

Hi edmund

No. You cannot use March 2022 as this is part of the 21/22 tax year and your income is received in December 2022 which is part of the 22/23 tax year.
You need to use rates within the same tax year.

Thank you
 

Dear sir, Thank you for your correction. The Mar/23 average rate applies to the Apr /22 income or proceeds that is acceptable, right? Does the monthly average rate apply to the same month’s income or proceeds only?

Dear HMRC, I have some foreign interest income (received in May, Jul, Nov 2023) within 2023/2024 tax year. Can I use the spot rate on 13 Jul 2023 to report all these foreign income on my self assessment? Thanks

Hi edmund,
Yes to first part.
You can use any of the monthly rates if this is more beneficial.
Thank you. 

Hi aa b,
As this falls into the 23/24 tax year, yes. however this tax return is not available yet and wont be until after 6/4/24.
Thank you.