If you earn money abroad – rent from an overseas property, a foreign pension, interest from a bank account in another country, or you import goods for your business – you will need to convert those amounts into pounds sterling for HMRC. This guide explains which exchange rates HMRC publishes, what each one is for, and which rate to use on your tax return.
HMRC publishes three types of exchange rate
- Monthly exchange rates – published on the penultimate Thursday of each month and used mainly by traders to calculate the customs value (and import VAT) of goods brought into the UK. View HMRC monthly exchange rates.
- Yearly average rates – published on 31 March and 31 December each year, based on the previous 12 months. These are often the most practical choice for converting regular foreign income over a tax year. View HMRC average rates.
- Spot rates – the rate on 31 March and 31 December, useful for valuing balances such as foreign bank accounts at a set date. View HMRC spot rates.
Which rate should I use on my Self Assessment tax return?
HMRC does not set one compulsory exchange rate for income tax. What matters is that the rate you use is reasonable and that you apply it consistently from year to year. In practice, most people use one of these:
- The actual rate on the day you received the income – the most accurate option for one-off payments, such as a property sale or a lump sum.
- HMRC’s yearly average rate – the simplest option for regular income received throughout the year, such as monthly rent or a pension.
- HMRC’s monthly rate for the month you received the income – a reasonable middle ground if you have a few payments each year.
Keep a note of which rate you used and where it came from. If HMRC ever asks, you can show your workings.
A simple example
Suppose you receive €10,000 of rent from a flat in Spain in October 2026. Using HMRC’s October 2026 monthly rate of €1.1665 to £1, that is €10,000 ÷ 1.1665 = £8,572.65 to report on your UK return. If your rent comes in every month, using the yearly average rate is usually simpler and just as acceptable.
This example is for illustration only – always check the current rate for your own dates.
Common situations where you need to convert currency
- Rental income from overseas property (reported on the foreign pages, SA106) – see our guide to foreign property income tax in the UK.
- Foreign pensions, interest and dividends.
- Selling a property or shares abroad (Capital Gains Tax – you convert both the purchase and sale price at the rates on those dates).
- Claiming Foreign Tax Credit Relief for tax already paid in another country.
- Importing goods for your business (customs value and import VAT).
Need help with foreign income?
Getting the exchange rate wrong can mean paying too much tax, or too little and facing penalties. At Accountancy N Tax Services we help landlords, pensioners and business owners across London and Surrey report foreign income correctly, claim the right reliefs and meet every deadline – see our key tax dates and our Self Assessment tax return service.
Your first consultation is free. Call 020 7112 9098 or email info@accountancyntax.co.uk.
