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.
 

Dear HMRC, I receive a quarterly pension payment in USD so receive four separate payments roughly spread equally throughout a single tax year. As I understand from reviewing previous replies, please could you confirm that I am allowed to convert to GBP the four separate USD payments that are received on different dates within the same tax year with a single day spot rate of my choosing taken say from the Bank of England database as long as the selected spot day rate is taken from within the same tax year as that of the payments received? Thanks

Hi ChrisJames,
Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for.  For your convenience, there are exchange rates at UK Government Web Archive/ukgwa/20231016190054/Exchange rates from HMRC in CSV and XML format and for older rates at UK Government Web Archive/ukgwa/20100202113554/Exchange rates from HMRC in CSV and XML format. You are free to use any of the supplied rates or one of your own choosing, such as a recognised stock exchange.
Thank you.

Hi HMRC Admin Thank you for that reply and I understand that you do not provide an official exchange rate… however, after looking through several of your previous responses to different similar enquiries (e.g. two examples quoted below), I was looking for confirmation to the following specific question; Q- “Is it acceptable to convert to GBP four separate USD payments received on different dates within the same tax year, using a single day spot rate of my choosing (taken say from the Bank of England database) provided that the chosen spot day rate is selected from within the same tax year as that of the payments received?” In summary, by looking at some previous responses to similar questions, I was looking for confirmation that I can "Use any spot rate as long as it applies to the tax year in question". Examples of previous Admin responses; -Posted 10 months ago (13/07/2023 2:52 PM) by HMRC Admin 8 (/public/f18c9697-250d-ea11-a811-000d3a7ed2f2/forum-posts) As long as the spot rate applies to the tax year in question, there is no preference as to which is used -Posted 5 months ago (11/01/2024 11:54 AM) by HMRC Admin 20 (/public/8f77284c-1c5b-eb11-a812-00224840f801/forum-posts) You can use any of the dates that fall within the tax year the income arises Thankyou.

Hi
The exchange rate is not set in stone, which is why you have a choice.  Under the terms of Self Assessment, we do not provide an official exchange rate and the onus is on the individual to use a just and reasonable exchange rate for each acquisition and disposal.  You are free to use the stock exchange rate on the day, HMRC exchange rates, monthly, annual average, spot rate, or the rate from another source.

Hi HMRC Admin Thank you again for that reply but am still looking for an answer to my specific question which can be simplified to; Q- “Is it acceptable to use only one spot rate (chosen from a single day within the same tax year) to convert all payments received spread throughout the same tax year?” Thanks

Hi

It is up to you how you do this, as long as the exhange rate is just and reasonable.

Thank you.