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Individuals who choose to be taxed on the remittance basis do not qualify for the annual exempt amount for capital gains tax.
This causes difficulties in completing self assessment returns because of the need to establish the gains and losses that arise on movements from overseas bank accounts held in currencies other than sterling.
HMRC have published suggestions on how to reduce these difficulties.
For example, calculating the base cost for disposals and part disposals of non-sterling bank accounts can be problematic where it cannot be ascertained which exchange rate was in force when the debt was acquired or increased.
HMRC will allow a simplified approach whereby the acquisition cost, as at 6 April 2008, of a debt represented by a non-sterling account can be calculated using an average exchange rate over a period up to 6 April 2008.
They have calculated the average rate for the six years to April 2008 for US dollars and euros: £1 = US$0.560275917 and €0.68058106 respectively.
With regard to the share matching and part disposal rules, HMRC’s Residence, Domicile and Remittances Manual includes examples using the part disposal rules in TCGA 1992, s 42 to calculate gains and losses arising from withdrawals from foreign currency bank accounts.
This appears to run counter to HMRC’s Capital Gains Manual paragraph CG78332.
The Revenue will therefore not insist that tax computations of such gains and losses carried out for years up to and including 2007/08 using the share matching rules need to be revisited.
