The right exchange rate for each form.
Every figure on a US return must be in dollars and every figure on a UK return in sterling — and each authority publishes its own rates for the job.
Different forms, different rates
Income on a US return converts at the IRS yearly average rate (or the spot rate on receipt for large one-off items). FBAR and Form 8938 balances use the Treasury's 31 December rate — a different number. HMRC publishes monthly and annual average rates for the UK direction, with spot rates allowed where they better reflect the transaction.
Consistency is the audit defence: pick the published rate each form calls for and apply it throughout. Cherry-picking rates line-by-line is the pattern examiners look for.
- IRS yearly average for income; Treasury year-end for FBAR/8938
- HMRC monthly or annual averages for Self Assessment
- Currency movement itself can create taxable gains — see property sales
Published rates, and a converter that uses them
Income converts at the IRS yearly average; FBAR and Form 8938 balances at the Treasury 31 December rate. Rates are the published IRS and Treasury figures for each year.
| Year | IRS yearly average (£ per $1) | Treasury 31 Dec (£ per $1) |
|---|---|---|
| 2025 | 0.759 | 0.743 |
| 2024 | 0.783 | 0.797 |
| 2023 | 0.804 | 0.786 |
| 2022 | 0.811 | 0.830 |
| 2021 | 0.727 | 0.740 |
Questions we get about this
Neither authority mandates a single source, but the rate needs to be reasonable, consistently applied and capable of being evidenced.
Published annual averages are the usual choice for recurring income.
Treat it as a starting point. If it says an obligation applies, the next question is what the filing actually involves and whether earlier years are affected.
If it says nothing applies, it is worth re-running whenever your circumstances change - a move, a property, a new account.
It depends on the item. Many figures can use an average rate for the year, while specific transactions - a sale, a distribution - generally use the rate on the day.
Consistency matters as much as the choice: switching methods between years invites questions.
Because the US computes gains in dollars. An asset that barely moved in sterling can show a substantial dollar gain purely on exchange rate movement.
Foreign-currency mortgages can produce a separate gain on repayment for the same reason.
It covers the common cases and will tell you reliably whether the basics apply to you. It is a guide, not a filing position.
Edge cases - trusts, business ownership, unusual residence patterns - can change the answer, which is why the result flags when a position is worth checking properly.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
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