Money inherited in GBP

M

Mattb

Registered User
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Hi all.
I have inherited approx £60,000 which is sitting in a UK bank account. However I live in Ireland. With the exchange rate as it is, currently £60,000 is worth about €68,000. I am in no immediate hurry to get my hands on the money. Should I leave it in the UK in the hope that the exchange rate works in my favour and the pounds gains strength against the euro? Any ideas would be appreciated.
 
I've no idea how the exchange rate is going to work but don't forget that you'd have to pay CGT on any gain between the date you received the money in STG (or whenever the trigger date is for inheritances) and the date you convert to EUR.
 
but don't forget that you'd have to pay CGT on any gain between the date you received the money in STG
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Why would this be the case? If any of us put some money in a UK bank why would we pay CGT?
 
CGT is payable on an exchange rate gain. So it applies if you make a gain when you transfer back to Euro.
 
WaterSprite said:
you'd have to pay CGT on any gain between the date you received the money in STG (or whenever the trigger date is for inheritances) and the date you convert to EUR.
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I don't think there is any Tax payable on gains when monies are transferred between currencies when it is not a business transaction.
 
I'm pretty sure there is! The GBP money is an asset and, when you convert to Euro, that's a disposal of the asset - leading to CGT.
 
But surely we are to assume that CAT has already been paid ??
 
Yep- CAT is paid when the estate is settled (I'm not sure of the process of that) and you are left with e.g. £60k net of CAT - having paid CAT based on the exchange rate at the time of settlement. That £60k then is another asset which has a base cost (for CGT purps) of e.g. €70k (current exchange rate). Then, if you transfer it all into Euro in a year's time and you get €75k, you pay CGT on that €5k gain.
 
have just had a chat with the senior FX traders in the treasury of the bank where I work

the unanimous message I am getting (from people who have assets overseas) is that you do not have to pay CGT on standalone FX gains. It makes sense that you would not, since the process would be unworkable - everyone would have to declare every sum of money they transfer between the UK and Ireland - thousands of transfers a day I suspect! Also, what happens if you incurred a loss? Then you would be in really complicated territory of getting tax credits!!

If the FX gain is on the back of a sale of an underlying asset, then the gain would be added to the profit of the total transaction, and taxed appropriately. the FX gain would not be stripped out for CGT purposes.

The situation you are in seems like a grey area. It could be argued that the inheritance is a transaction onto which the FX gain should be added in the same was as if you had sold a UK house and were converting back to Euros. However, since you have presumably already paid some kind of inheritance tax (a process about which I know nothing), you should at this stage just be able to transfer the money into Euro as a standalone FX transaction, which is not liable to CGT
 
FWIW, I wasn't making any comment on standalone forex gains. I'm in the position where I sold shares in US$ and left that money in dollars until the exchange rate improved. I've been advised by both a big-6 firm and an individual accountant that CGT is payable on any forex gains when I move the money back into Euro, notwithstanding that I've already paid CGT on the actual transaction (using exchange rate at the time of sale). I'd imagine that OP's situation is the same and that the difference is that the money (GBP) does represent an "asset" in both our cases. Actually, it probably depends on whether the OP got cash or if the cash represents the value of a liquidated asset...

That said, I'm not a tax advisor and probably shouldn't have put it so bluntly in my original post. The advice I got was unequivocal though (for my circs)
 
Sorry for the additional post but, looking at the Revenue site, it seems pretty clear to me that foreign currency is an "asset" for CGT purps:

"2. What are assets for Capital Gains Tax purposes?
All forms of property are assets for CGT purposes whether situated in or outside the State. Examples of assets are:
  • Land
  • Shares
  • Goodwill
  • Currency, other than Irish currency"
 
Water, I differ with you. For years I have been bringing Foreign Money into hear and sometimes made a gain, other than from an asset disposal, and have never had to pay CGT on profits made from currency transaction. Have had two Revenue Audits and the matter never arose.
 
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