How do I exchange foreign currencies into GBP?


How do I calculate how much my UK limited company earns in British Pounds if I take payments in foreign curriencies (Polish zloty and Euros), and how I then know how much tax I need to pay? In Poland this would be pretty simple - I'd check the exchange rate by the National Bank of Poland from the day on which I received payments. How is it in England?
And also, could I exchange my money online? And if so, what would be taxed: the amount of money in a foreign currency * some exchange rate - costs of the exchange, or the exchanged money in GBP?

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asked Feb 8 '12 at 07:20
452 points

1 Answer


When you receive foreign payments be it in Zlotys or Euros the way you calculate your liability in terms of taxes etc is by converting it into the currency of the country where you pay taxes and applying the rates/laws of it.

So if you are in UK and receive payments in Zlotys you will first convert them into GBP and then calculate everything. Now the exchange rate that you will get will be different from the rate that National Bank of Poland will publish for the simple reason that you quite likely will not be dealing with National Bank of Poland directly and since you are in UK you will be dealing with a British Bank that doesn't have to abide by anything that Poland's central bank does.

So your calculation should be based on the rate you can receive from the intermediary that you will go through same as if your went to a Currency exchange place in the airport and changed cash (though the rate would probably be better). So go to the bank that you have a merchant account with or if you are using a service like PayPal talk to them and see what would be the exchange rate you will receive for payments in Polish Zlotys then when the payment hits your bank it will automatically be converted less fees if any.

answered Feb 8 '12 at 08:02
1,779 points

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