Foreign Currency Bank Accounts Print
The change in the Remittance Basis rules from 6 April 2008 created various problems that did not previously exist under the pre 6 April 2008 regime when capital gains were taxed on the remittance basis. A non-UK domicile may have held an offshore bank account for many years through which hundreds of transactions may have taken place. This was of no consequence in the past as no account would have to be taken of any currency gains unless funds had been remitted to the UK. Since 6 April 2008 an individual may not wish to claim the remittance basis, in particular if he has to pay the remittance basis tax charge, but he may still have transactions passing through his foreign currency accounts.
In order to address this issue, currency gains and losses realised within an individual’s foreign currency bank account have been exempt from CGT since 6 April 2012. According to HM Treasury, over time capital gains and losses tend to broadly balance each other, and as a consequence it was considered that the effort required to make the relevant calculations is disproportionate to the overall tax position. This was a very welcome measure which applies to both domiciled and non-domiciled individuals.
In addition, foreign currency gains on bank accounts held by offshore companies were taken outside the scope of the Section 3 TCGA 1992 charge. (Attribution of gains of a foreign company on its shareholders.)
Foreign currency gains realised before 6 April 2012 which are remitted to the UK by a non- domicile after 5 April 2012 remain taxable under the rules which existed at the time the gain arose.