The rate for conversion for UK pounds to Euros for this year's tax forms (the returns which are due at the end of May 2014) is 0.8492
Rob Hesketh explains:
The rate for the pound against the Euro can be expressed in two ways. In Europe they tend to think in terms of how many pounds there are to a Euro, so that rate is 84.92 pence, or 0.8492 pounds. In the UK we tend to think of it in terms of how many Euros there are in a pound. Both are equally valid, but how do we get from one to the other? The answer is a simple mathematical (inverse) calculation. Just divide 1 by the Banque de France rate:
So, 1/0.8492=1.1776, the rate as we would recognise it. Both mean the same thing, so there is no ‘skulduggery’ involved. If you want to convert a Euro amount to sterling using the French rate, just multiply by 0.8492. If you want to use ‘our’ rate, then divide by 1.1776. You will get a very slight difference, as we have only used four decimal places. After all, 1.1775788 would be a bit cumbersome, wouldn’t it?
Remember, it’s the other way round if you want to convert a sterling amount into Euros. You divide by 0.8109 or multiply by 1.2332.
Having discovered the real average rate for the year, the tax return issue isn’t as clear-cut as many people think. There is actually no stated rate issued each year for the tax return. The fisc actually says that all items should be entered at the rate at which they were converted, but in terms of multiple regular transactions they do realise that this is impractical. In effect you can use this to your own advantage. There is a French government website that provides average rates for all world currencies:
But just to be awkward they haven't updated it for the average for all of 2013 yet, so my source for this year is :
and this shows that the average for 2012 is 0.8492, which is also 1.1776 as discussed above, but if you had a large transaction where the real rate used was more advantageous, you could get away with using it. So as an example, if you received a large taxable sum early in the year (maybe the sale of a second home, or even a premium bond win), and you converted that into euros at say 1.1850, you would be better off using that rate instead of the average rate, as it created less euros.
Important - it is the rate on the date the action took place that you can use instead of the average rate, but you must be able to prove it.
Information kindly supplied by Rob Hesketh
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