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HMRC internal manual

Capital Gains Manual

Foreign currency: foreign currency bank accounts - introduction

When foreign currency is held in a bank account and the account has a credit balance, the account is an asset for the purposes of capital gains tax.

For capital gains purposes all gains and losses must be computed in sterling (see CG78310) so on the disposal of all or part of this asset a capital gain or loss may arise.

Although the principles that apply are relatively straightforward their application is less so primarily because of the number and complexity of computations that may be required to calculate the actual gains or losses that arise.

Changes were introduced from 6 April 2008 and 16 December 2009 in connection with the taxation of non-domiciled individuals.

From 6 April 2012 the treatment of foreign currency bank accounts was simplified. From that date the treatment of foreign currency bank accounts for individuals, trustees and personal representatives (including members of a partnership) were aligned with the treatment of ‘simple debts’. TCGA92/S252. Such debts will not give rise to chargeable gains (or allowable losses) in the hands of the original creditor.