HMRC monthly rates
Bank of England daily rates
How TealFX converts
The rule, the method TealFX applies, and where every rate comes from. The same method runs the rate pages, the calculator, the API and the AI connector.
The rule
For capital gains tax, HMRC’s Capital Gains Manual asks for each amount to be converted into sterling at the exchange rate in force on its date. It doesn’t prescribe a source, but expects a reasonable and consistent method (CG78310).
So the choice of source is yours or your adviser’s. What matters is applying one method to every figure, and keeping it.
The default: HMRC monthly rates
HMRC sets one rate per currency for each calendar month and publishes it in advance. It applies to every transaction dated in that month. HMRC publishes these rates for customs and VAT, and they’re widely used for capital gains tax.
TealFX uses them by default because they cover every currency: 141 in the latest month, with rates on TealFX from January 2015. One source can then convert every figure of every disposal, whatever the currency, without switching methods between a client’s assets. They’re published under the Open Government Licence, so anyone can check and reuse them.
The trade-off
Because HMRC fixes its rate before the month starts, it can sit far from the market in a month when sterling moves sharply. For most months the difference is small.
Bank of England
1.1492–1.3110
23 Mar and 9 Mar fixings
Widest gap
11.3%
on 23 March
US dollar, March 2020. Every fixing that month.
That’s why TealFX shows the Bank of England daily rate beside HMRC’s, for transparency: so you can see how much the choice of method matters before choosing one. It never suggests switching to whichever gives the lower gain.
The daily method: Bank of England spot rates
The Bank of England records a spot rate at 4pm London on each UK working day, for 26 currencies. It’s the closest match to a specific transaction date. The Bank states that these are not official rates.
If you use a daily rate, use it for every figure in the computation, as you would HMRC’s. The API and the AI connector take source=boe for that.
How each figure is worked out
Rates are units of foreign currency per £1, so sterling = amount ÷ rate. For example, $100,000 at HMRC’s March 2020 rate of 1.2952 is £77,208.15.
- Each amount is converted at the rate for its own date: the cost, each cost of buying and selling, the proceeds and any foreign tax.
- Each line is rounded to the penny, then the lines are added up.
- Foreign tax is converted at the rate for the date it was paid, for foreign tax credit relief. It’s credited against UK tax, not deducted from the gain.
- Every result names the source used, and shows the other source’s result for transparency only.
Dates without a rate
Every date has an HMRC rate, because each month’s rate covers every day in it.
The Bank of England publishes nothing on weekends and UK bank holidays. TealFX then uses the nearest earlier working day’s fixing, within 7 days, and only when a later fixing exists or the gap is just a weekend. Otherwise it returns no rate rather than an out-of-date one. Every result says which date was used and why, and the API and connector can refuse substitutes altogether (fallback=none).
Where every rate comes from
- HMRC: the monthly files on the Trade Tariff Service from January 2021, and on GOV.UK before that. Imported every Thursday, including the next month’s rates once HMRC publishes them.
- Bank of England: the Bank’s Statistical Interactive Database, one series per currency (USD is XUDLUSS). Imported every weekday evening.
- UAE dirham: the Bank doesn’t publish one, so TealFX derives it from the Bank’s USD rate and the fixed peg of 3.6725 dirhams per dollar, and labels it as derived.
Every rate page names its source and links to the publication, so anyone can check a figure against the original.
One method, kept
Use one source for every figure of a computation, never mixed line by line, and keep it from one disposal and tax year to the next. Don’t switch to suit a result. TealFX shows the other source only so the stakes are visible, never as the one to pick.
What this page isn’t
It isn’t tax advice. TealFX supplies sourced exchange rates and the conversion; results are for accountant review. TealFX isn’t affiliated with or endorsed by HMRC or the Bank of England. Questions or corrections: contact us.