Remittance basis and foreign currency bank accounts

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

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:

•
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

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