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Posted Sat, 10 Feb 2024 23:33:59 GMT by
Hi, Sorry, I was just checking whether I was doing the right thing. I'm a freelance journalist, registered with HMRC as sole trader. Sometimes, I write pieces for clients who are abroad. As they're based in France, I invoice them in euros (I'm not liable to VAT) but sometimes there's a bit of time befoe they pay me. So what I do is the following. Let's say I invoiced them in May for a piece worth 150 euros... and they send me the money on the following month, June, then. What I do, when I declare this amount on my tax return, is that I convert this amount, 150 euros, into pounds with HMRC monthly exchange rate ( and I take the rate used for the month I received the money, so, in this case, it would be the June euro/pounds exchange rate.... is that correct ? am I doing the right thing ? many thanks
Posted Wed, 14 Feb 2024 12:12:24 GMT by HMRC Admin 25
Hi ju8689,
There are two ways to account for your sole trader income, regardless of where it arises.
You either use the traditional accounting method or the cash basis.
The cash basis is simpler to apply, but does have restrictions, that may mean it is not the best options.
Cash basis is the accounting of money coming into and going out of your bank account.  E.g. "You invoiced someone on 15 March 2022 but did not receive the money until 30 April 2022. Record this income for the 2022 to 2023 tax year".
Guidance on the cash basis can be found here:
Cash basis
The traditional method of accounting will apply using the dates of the invoices e.g. "You invoiced a customer on 28 March 2022.
You record that invoice for the 2021 to 2022 tax year, even if you did not receive the money until the next tax year".
HS222 How to calculate your taxable profits (2022):
Thank you. 

Posted Wed, 14 Feb 2024 22:52:42 GMT by
Hi, Many thanks. So I guess I would be using cash basis, then, thank you. But my question was actually more about the conversion into pounds. Let's say that I invoiced a piece worth 150 euros in January, this year but then received the money in February. So if I'm following the cash basis system, the amount I'm supposed to declare to HMRC is £129 (150 divided by 1.1665 - which is the February monthly rate euro/pound for the Eurozone, according to Hmrc exchange :, is that correct ? Many thanks again
Posted Tue, 20 Feb 2024 09:22:45 GMT by HMRC Admin 5
Hi ju8689

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.  
For your convenience, you can use the exchange rates you have described or obtain an exchange rate from another source.  It is up to you if you want to use the monthly rate, as you can equally use the spot rate or the annual rate.

Thank you

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