Hi all,
I'm UK resident and domiciled. I have a US dollar brokerage account which I use to purchase or sell US-listed option about once or twice a month. I don't trade forex. I'm aware that each purchase and sale needs to be converted into sterling separately first before calculating the gain/loss and also that interest received on the cash balance in the account should be converted into sterling and separately declared. I do have a couple of queries though:
1. For the exchange rate should I use the monthly average rates from the HMRC site or the daily spot rates from the Bank of England site. If the latter, would it be reasonable to use the nearest previous day's rate for trades that occur on days that have no published rate?
2. Do I need to calculate gains/losses on the cash balance of the account that arise due to foreign exchange movements. I've read CG78300 and sections 251 and 252 TCGA as amended in 2012 but I'm still not clear. The act states that for simple debts and foreign currency bank accounts there is no chargeable gain. The manual indicates that buying/selling shares results in the acquisition/disposal of currency which is chargeable. I also found the following tax guide (https://www.icaew.com/-/media/corporate/archive/files/technical/tax/tax-news/taxguides/taxguide-4-11-foreign-currency-issues.ashx). If I understand it correctly, paragraph 39 suggests foreign currency held in a simple execution-only brokerage account would be a debt which is not chargeable, but funds invested with a fund manager may be chargeable depending on how it is structured.
Can anyone confirm either way? I'm trying to get advice from HMRC but have had little luck getting through so far.
Thanks
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