Personal Tax

Remittance basis and foreign currency bank accounts

Produced by Tolley
  • 22 Dec 2021 18:41

The following Personal Tax guidance note Produced 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
  • Important note regarding links to legislation
  • The starting point
  • £500 de-minimis
  • Acquisition cost at 6 April 2008
  • Methodology
  • Aggregation of gains and losses
  • Accounts in one currency treated as one account
  • More...

Remittance basis and foreign currency bank accounts

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.

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

  1. gains on foreign currency accounts will not be taxed, and

  2. 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.

For the purposes of the other remittance basis notes in TolleyGuidance, it was assumed for simplicity that there were no foreign exchange (FX) differences to be taken into account. In reality this is not the case. Some key issues relating to FX on foreign currency bank accounts in the tax years from 6 April 2008 to 5 April 2012 are covered below.

Important note regarding links to legislation

The legislative links in these rest of this guidance note are for reference

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

Loans written off

Companies sometimes provide directors, employees or shareholders with low interest (or interest-free) loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed in detail in

25 Oct 2021 14:12 | Produced by Tolley Read more Read more

Share for share exchange

This guidance note considers the capital gains tax implications where shares are sold in exchange for new shares.The consideration paid by a purchasing company to the shareholder(s) for their shares in a target company could be in the form of either:•new shares in the purchasing company in exchange

10 Jan 2022 15:02 | Produced by Tolley Read more Read more

Payment of tax due under self assessment

Normal due dateIndividuals are required to pay any outstanding income tax, Class 2 and Class 4 national insurance and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2021 for the 2019/20 tax year). From 6 April 2020, UK resident individuals who

27 Sep 2021 07:14 | Produced by Tolley Read more Read more