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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am an individual with money in a normal UK bank account.

Resolved Question:

Hello,
I am an individual with money in a normal UK bank account. If I transfer it into a foreign currency bank account, and then later transfer it back to the original UK bank account and make a FX gain - is this assesable for UK tax? I originally thought it would be assesable as a CGT item. However, looking at HMRC guidance " https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg78321" has confused me as it appears to suggest that post 6 April 2012 such FX gains are no longer relevant for CGT. Any thoughts
Regards,
Dan
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

It's always been the case that if an individual puts money into a foreign currency bank account for purely domestic purposes any currency gains would not be taxable. If it was for investment purposes, then the currency gains would be taxable, at least until 6 April 2012.

As you will see from the page you discovered yourself, gains on foreign currency bank accounts are no longer taxable and nor are losses allowable against other gains. If any of the money in the foreign currency account is invested and later returned, any foreign currency gains made during the period of the investment will be taxable.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.
Thanks, ***** ***** respect of your comment: "if any of the money in the foreign currency account is invested and later returned, any foreign currency gains made during the period of the investment will be taxable." I think this is what I am talking about i.e. transfer money from UK to a foreign bank account in foreign currency, then return the money back to the UK and transfer back to sterling. For example, transfer 10 pounds at E.R of 2.0 for Aussie dollars = $20 dollars in Australian bank account. Then a month later, transfer the $20 back to the UK at E.R of 1.66 = now have 12 pounds in the UK, giving a gain of 2 pounds. Is this 2 pounds taxable - is that what you mean?. Thanks
Expert:  TonyTax replied 1 year ago.

That isn't what I was suggesting. My apologies.

If you moved £1,000 into a US dollar account for a year and then convert it back into Sterling a year later, the gain won't be taxable. If, however, when you open the US dollar account you invest in US shares, sell them a year later and make gains on the shares, the currency gain inherent in the shares (comparing the purchase price and exchange rate at the time of purchase with the sale price and exchange rate at the time of sale) will be taxable in addition to the gain on the simple movement in the share price.

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