Hedging Brexit risk through ETF - need to pay tax on "profits"?

[atreitz]

Hi,
I've moved from the US to the UK on January 29th 2016. We brought over cash from a sold house at an exchange rate of around 1.43 GBP to USD.
Just before the Brexit election I hedged the risk of the GBP falling by investing part of the cash into an S&P 500 ETF in GBP and due to Brexit and the GBP collapse made "profits" (which are just the result me investing into a USD denoted ETF and thus not real profits - the S&P ETF is actually in USD but denoted in GBP so while the value stayed the same, the drop in GBP produced a "profit").
Now here the question: Can i somehow argue that those profits are not relevant for CGT in the UK because I moved from the US this year and just tried to retain the value of my money in terms of GBP to USD? (i.e. offset the currency loss against the "hedge" profits)?
Thanks,
Andreas

[David Geordie]

I'm no tax expert, but I am in a similar situation to you. I live in Canada (expat Brit now dual national) and I moved money to the UK to balance my portfolio from an FX perspective. Pre Brexit I also bought US index ETF's and made out well due to the fall of the GBP, at least on that ETF. As I examine my overall portfolio I have been hammered (in CAD terms) by Brexit, but my brokerage account in the UK still shows a reasonable gain. From my perspective I have lost money, but from HMRC perspective I bought an asset (my US ETF) at a certain price in GBP, and now it's worth more in GBP. Ergo, if I sell I will have made a profit. As I said, I'm no expert, but this is how I'm viewing this. You might want to think about how you can sell some of your ETF in the 2016-17 tax year to take advantage of the CGT free allowance of 11,100GBP. I'm still investigating whether or not I can sell them buy back to reset the cost base. Hope this is helpful.