US Shares and UK CGT: Why Your Dollar Profit Is Not Your Taxable Gain

UK capital gains tax is worked out in pounds. For shares bought and sold in dollars, HMRC converts the purchase cost at the exchange rate on the day you bought and the sale proceeds at the rate on the day you sold. Your taxable gain is the difference between those two sterling amounts. It is not your dollar profit converted at today's rate, and it is often not the profit figure your broker shows.

That is why a US share can make money in dollars and still produce a loss for UK tax, or the reverse. The pound moved from about $1.22 in January 2025 to about $1.37 by July 2025, which was enough to turn a $500 profit into a £575 loss in the example below.

The HMRC rule: convert each side on its own date

HMRC's Capital Gains Manual at CG78310 treats buying shares with foreign currency as an exchange of one asset for another. The cost of the shares is the sterling value of the dollars at the exchange rate in force on the acquisition date. The proceeds are the sterling value of the dollars received at the rate in force on the disposal date.

The manual also rejects the shortcut of working out the gain in dollars and converting the result once. It relies on two cases, Bentley v Pike (1981) and Capcount Trading v Evans (1992), which confirmed that each foreign-currency amount is converted when it is incurred or received. HMRC's own example at CG78336 shows shares bought and sold for exactly $100,000 producing a sterling gain of £6,521, because the pound weakened in between.

Worked example with real exchange rates

Sam holds a taxable account and buys 50 shares in a US company for $200 each, then sells them five months later for $210 each. To keep the arithmetic visible, this example leaves out dealing fees. The exchange rates are the Bank of England daily spot rates for those dates (series XUDLUSS, dollars per pound).

In dollars, Sam made $500. In pounds, the shares cost £8,229.10 and the sale brought in £7,654.18, so the disposal is a loss of £574.92 for the 2025/26 tax year. The share price rose 5%, but the pound rose about 13% against the dollar over the same period, and the second effect was larger.

The comparison above uses the same trade three ways. The HMRC monthly rates for January and July 2025 were 1.2707 and 1.3451. Because 13 January was one of the pound's weakest days of early 2025, the single January rate makes the purchase look about £360 cheaper, and most of the loss disappears. Converting the $500 profit once at the sale-date rate produces a taxable gain where there is in fact a loss. That is the method CG78310 says not to accept.

Which exchange rate should you use?

HMRC does not name a single source. CG78310 says HMRC "does not prescribe" a reference point for the rate, but expects a reasonable and consistent method. In practice that leaves two sensible choices:

• The rate your broker actually used when it converted your money for the trade. This is the most direct evidence of the sterling you paid or received.
• A published daily rate for the trade date, such as the Bank of England spot rate, when the trade settled in dollars and no sterling conversion happened.

HMRC's monthly exchange rates are published for customs and VAT. We have not found HMRC capital gains guidance that approves them for share disposals, and the example above shows they are not a neutral substitute for the rate on the day. Whichever method you choose, use it for every trade and keep a note of the source.

What your broker shows, and why it differs

Broker profit figures are built for tracking performance, not for HMRC. Each of the three most common platforms for UK investors buying US shares reports something different.

Trading 212

If your Invest account is in pounds, Trading 212 converts your money at the spot rate plus a 0.15% FX fee, which it shows on the Review Order page before you trade. The History CSV records the sterling Total for each trade, the Exchange rate, and a separate Currency conversion fee. The sterling Total is the money that actually left or reached your account on the trade date, so it already reflects the rate on that day.

Trading 212's own result figure uses a different method. Its help centre says the result uses your average purchase price and an average FX rate. That can come close to the HMRC figure for one purchase and one sale. It drifts once you have several purchases, sell part of a holding, or rebuy within 30 days, because HMRC then matches the sale against particular purchases before it uses the average.

Interactive Brokers

Interactive Brokers reports realised profit for each closed position in the currency of the trade, and summarises it in your account's base currency on a first in, first out basis or another lot method you choose. Its year-end reports cover the calendar year, not the UK tax year, and none applies HMRC's matching rules. If your account holds dollars, many trades never involve a sterling conversion at all, so you need a dated rate for each trade. The Trades section of an Activity Flex Query can include an FX Rate to Base field for this.

Hargreaves Lansdown

HL settles overseas deals in pounds. It converts the price at the interbank rate and adds a tiered foreign exchange charge, so the amounts in your HL transaction history are already in sterling. HL does not calculate capital gains for you. Its adviser centre says so directly. You still need to apply the matching rules to those sterling amounts.

Our broker records guide compares the annual documents and exports from all three platforms in more detail.

Several purchases: the pool is kept in pounds

Once you have bought the same share more than once, the Section 104 pool takes over. Each purchase goes into the pool at its own sterling cost on its own date. You do not average the dollar prices and convert the average later.

Had the dollar average cost been used instead ($168 a share, so $4,200 for 25 shares) and the $1,300 dollar gain converted at the sale-date rate, the gain would come out at £956.59. That overstates the taxable gain by £260.83. The remaining 25 shares stay in the pool with a sterling cost of £3,351.32.

The same-day and 30-day rules work exactly as they do for UK shares, using the sterling amounts. If you sell and buy back the same US share within 30 days, the sale is matched with the later purchase at that purchase's own sterling cost. See the 30-day rule guide for how that matching works.

Commission and currency conversion fees

Dealing commission and stamp taxes are allowable incidental costs under TCGA 1992 s.38. A commission charged in dollars is converted at the rate for that trade, like the share price itself.

HMRC has not published guidance specifically on broker FX fees. A fee charged as part of executing the share trade, such as Trading 212's 0.15% or HL's foreign exchange charge, is commonly treated as part of the cost or a deduction from proceeds. Where the fee is built into the rate you were given, it is already inside the sterling amount. A separate conversion of idle cash, not tied to a trade, is not a cost of the shares.

What about the dollars themselves?

Foreign currency is a chargeable asset in principle. However, since 6 April 2012, individuals do not make chargeable gains or allowable losses on foreign currency bank account balances. HMRC explains this at CG78320. HMRC has not addressed currency held in a broker cash account directly. Many advisers treat it the same way, but take advice if you hold large dollar balances for long periods.

Records to keep

HMRC asks you to keep records showing the date, the amount paid and received, and any costs, including contract notes from your broker, for at least a year after the Self Assessment deadline. See GOV.UK record keeping. For foreign-currency trades, also keep:

• the exchange rate used for each purchase and sale, and where it came from;
• any FX fee shown separately on the trade; and
• your full purchase history for each share you sold, not just the tax year of the sale.

If you file the SA108 capital gains pages, HMRC asks you to send your computations. A computation that shows the dollar amount, the rate and the sterling result for each trade lets anyone checking it follow your working.

How FiscalFox converts foreign-currency trades

FiscalFox converts each trade on its own date before applying the same-day, 30-day and Section 104 rules. It uses, in order of preference:

1. the sterling amount your broker recorded, such as the Trading 212 Total;
2. the exchange rate your broker supplied for that trade, such as IBKR's FX Rate to Base (IBKR rates are first checked against published rates);
3. a rate implied by a same-day currency conversion in the same export; and
4. otherwise, the Bank of England daily rate for the trade date, with the European Central Bank rate as a backup. If no rate was published that day, the most recent earlier rate within seven days is used and the report says so.

FiscalFox does not use HMRC monthly rates. Wherever FiscalFox did the conversion, the transaction report shows the original amount, the rate, its date and its source. Currency conversion fees in Trading 212 and Freetrade exports are treated as allowable dealing costs. If no reliable rate is available for a trade, the file is not imported rather than guessed.