Expenses and Exchange Rate

[Zen.]

I've searched the HMRC website and can't find an answer, also emailed my accountant but I'm not sure his answer is correct.

I have some business expenses which are in €, I paid cash so what rate of exchange should I use?

I normally put an expense claim in once a month if that make a difference.

[Mx_Stu]

I would have thought the exchange rate when you (presumably) took cash out of the ATM?

[Zen.]

These were Euros I've had for well over two years, so I wouldn't expect to get that rate, there must be a definitive rate the HMRC require you to use, I just can't find it.

[spikeyhead]

So long as you can justify it, then the tax man will usually accept it. As its been so long since you bought your Euros, I suspect that it will be much easier to use the tourist rate for the day you paid for things.

[Eric Mc]

The exchange rate as per the date the actual expense was incurred is the accurate method for converting.

Doing this for every individual receipt might be rather tedious though.

An "average" rate e.g. the rate at the beginning of the period the costs were incurred added to the rate at the end of the period divided by two - or the exchange rate at the time the cash was withdrawn (provided it wasn't too far removed in time from the date the costs were actually incurred) will be allowable as well.

[Zen.]

Eric Mc said:

The exchange rate as per the date the actual expense was incurred is the accurate method for converting.

Doing this for every individual receipt might be rather tedious though.

An "average" rate e.g. the rate at the beginning of the period the costs were incurred added to the rate at the end of the period divided by two - or the exchange rate at the time the cash was withdrawn (provided it wasn't too far removed in time from the date the costs were actually incurred) will be allowable as well.

Thanks Eric, whose rate do I use, looking around today, everyones rate varies a little.

[Electron]

I use a Credit Card and my statement has both the £ value of the euro transation but also the associated exchange rate.

For cash I use the currency converter on www.ft.com and list it as the conversion mechanism.

[viggen114]

I always use the published rate for the month from the Customs and Excise side of HMRC.
So for this month the rate for the Euro is 1.117.

Apologies if the references change, but that is HMRC.

[Zen.]

viggen114 said:

I always use the published rate for the month from the Customs and Excise side of HMRC.
So for this month the rate for the Euro is 1.117.

Apologies if the references change, but that is HMRC.

Excellent; that was the one I was searching for, just feel happier using a rate supplied by HMRC even though VAT is not relevant in this case.

[Eric Mc]

I use the HMRC rates as well. They can't argue with you if you have used the rates they publish.