Remittance basis and foreign currency bank accounts

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Remittance basis and foreign currency bank accounts
  • Fundamental change to foreign exchange gains from 6 April 2012
  • Rules for tax years up to and including 2011/12

Foreign currency bank accounts are central to the operation of the remittance basis. See in particular the Remittance basis - setting up foreign accounts guidance note, but also the Remittance basis - mixed funds and When are income and gains remitted? guidance notes.

Fundamental change to foreign exchange gains from 6 April 2012

From 6 April 2012 foreign currency gains or losses made by individuals, trustees and personal representatives on the withdrawal of funds from foreign bank accounts are exempt for capital gains tax purposes.

TCGA 1992, s 252

Generally speaking, this is welcome news for taxpayers and their advisers since:

  • gains on foreign currency accounts will not be taxed, and
  • the complexities of the previous regime have been swept away

However, if there is a loss on foreign currency, then there is no relief for that loss.

See Example 1.

Rules for tax years up to and including 2011/12

The remainder of this guidance note discusses the position in tax years 6 April 2008 to 5 April 2012.

More on Remittance rules: