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.
Related pages
- Free tool
Document checklist builder
Build the document list a cross-border filing actually needs: US, UK and account paperwork, gathered before the work starts rather than halfway through.
- Pillar guide
Tax specialists for US and UK
What US and UK tax specialists handle that a general accountant does not: residence tests, treaty relief, FBAR, PFICs, pensions, property and catch-up filings.
- Service
FATCA US reporting
FATCA reporting explained: Form 8938 thresholds for expats, how it differs from the FBAR, what foreign banks report, and the penalties for missing it.
- Pillar guide
Accountants for US and UK
How to choose accountants for US and UK tax: what each credential permits, how to verify it, what drives the fee, and when you do not need a specialist.
- Glossary
FBAR: definition
The Foreign Bank Account Report — FinCEN Form 114 — and its $10,000 aggregate trigger.
- Service
IRS Form W-8BEN
Form W-8BEN explained: certifying foreign status to US payers, claiming US-UK treaty withholding rates, ITIN requirements and the three-year validity.
Further reading
- Do you need to file a US tax return from abroad?
Owing nothing is not the same as not filing. The duty follows citizenship, the thresholds are lower than people assume, and some forms apply regardless of income.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
Got your answer and it looks complicated?
These tools are deliberately simple, and real positions rarely are. Send us what you found and we will confirm it properly.