Getting lump sum in Euros, managing exchange rate fluctuations

[Knid]

I’m about to get a somewhat unexpected sum of money in euros (work sharesave scheme that is closing early) - it’ll be about 20,000 euros, about half of which is profit. This means I need to declare the profit for capital gains tax as it’ll be over the new threshold.

I’m a bit worried about being at the mercy of exchange rates on the day when the money is transferred, and I wondered about setting up a euro account like Starling that would allow me to either drip feed the transfer into pounds to spread the risk or time it well. I’m not looking to play the market, just hoping to avoid a random exchange rate trough. But I’m also wondering if that makes my capital gains calculations complicated for limited value.

Anyone got experience / advice? Never had to look at exchange rates in detail apart from holiday spends before now!

Your capital gains tax will be calculated on the month you get the money as income using the HMRC exchange rates.
https://www.gov.uk/government/publications/hmrc-exchange-rates-for-2023-monthly

it doesn’t matter what actual exchange rate you get, you have to use the HMRC exchange rate to calculate your tax due,

tax due is calculated on the day it lands in ANY account in your possession whether in U.K. or in a foreign bank account, it’s not calculated from when you convert it to GBPs.

So your plan to keep in euros and take your time converting to GBPs will have no impact on your capital gains tax calculation.

Most of the larger banks will allow you to have foreign currency accounts.

For mine, you can ring them up, they will tell you the transfer price and rate and you can choose whether or not you want that price. Generally the transfer rate is pretty poor, maybe a couple of % worse than the official exchange rate. I always want to know the price because I am always suspicious that if there was a large currency event sometime during the transfer process the bank would choose which rate to supply to its own benefit !

There are alternatives. There are fx brokers where you can transfer the money to them and get a better rate. The risk being of course that there is a lot more chance that at some point you might lose your money, as the brokers tend to be much smaller institutions than the big banks. In fact I checked out a few brokers who were touting for business from me and some of them are VERY small businesses indeed so good reason to be wary of them. If you do use a broker on a large sum though it can save you a lot of money - so benefits vs. drawbacks. There are probably some large/reputable brokers out there - I just don't know who they are.

Thanks both - @HadalyEve I had no idea monthly HMRC exchange rates existed, so that is very useful thanks! And good to know the tax exchange rate situation is relatively straightforward.

Current bank is First Direct - looks like their default is that they would convert to sterling on receipt, but not charge for doing so. Will double check if there are other options with them.