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The short answer
HMRC's SA106 notes say to convert foreign income into pounds using the exchange rate at the time the income arose, and they link to HMRC's published exchange rates. Dividends are valued at the date of distribution, and income that could not be sent out of Nigeria is converted when that restriction ended. Whatever rate you use, apply it consistently and keep your workings.
Everything on a UK tax return is in pounds. If your Nigerian rent, interest or dividends arrive in naira, you must convert them, and the rate you choose changes the figure you pay tax on. With a currency that moves as much as the naira, getting this right matters. This guide is information, not tax advice.
What HMRC's notes say
The SA106 notes for the 2025 to 2026 tax year give three rules:
- Convert income using the exchange rate at the time the income arose.
- Value distributions, such as dividends, at their value on the date of distribution.
- For income that could not be remitted to the UK, convert using the exchange rate when the restriction ended.
The notes link to HMRC's exchange rates. They do not mention using an average rate for the year, and they do not name any particular commercial rate.
HMRC's published rates
HMRC publishes exchange rates through the UK Trade Tariff service: monthly rates, and average rates released on 31 March and 31 December each year. HMRC describes each average as the mean of all exchange rates in the monthly files for the 12 months before publication. The latest average release when we checked was March 2026. The figures for the naira are in the downloadable files and online tables, not on the summary page.
| Rate | What it is | When people use it |
|---|---|---|
| HMRC monthly rate | One rate per currency for each calendar month | For an item that arose on a known date, such as a single dividend |
| HMRC average rate | Mean of 12 monthly rates, published 31 March and 31 December | Sometimes for regular income across a year; the SA106 notes do not mention it |
| Rate actually received | The rate your provider used when you converted | Shows what you got, but the notes tie conversion to when income arose, not when you converted |
| CBN official rate | Nigeria's NFEM reference, quoted against the dollar | Used for Nigerian purposes; not the rate the SA106 notes point to |
If you want to use an average rate for regular income such as monthly rent, the notes are silent, so check with HMRC or an adviser and record the method you chose. Do not switch between methods to get a lower figure from year to year.
Worked example
Example only. All rates are assumed, not HMRC's figures. You receive three items in a tax year:
| Item | Date arose | Naira (gross) | Assumed HMRC monthly rate (₦ per £) | Pounds |
|---|---|---|---|---|
| Dividend | May | ₦400,000 | 2,000 | £200.00 |
| Annual rent in advance | September | ₦6,000,000 | 2,100 | £2,857.14 |
| Deposit interest | March | ₦250,000 | 2,050 | £121.95 |
The total to report is £3,179.09 before expenses and relief. If you later converted the rent to pounds at ₦2,300, you would receive about £2,608.70, but the figure for tax is still £2,857.14, because the rent arose in September. Any difference between the two is a currency matter, not a change to your rental income; whether it has tax effects is covered in UK tax on naira currency gains.
Nigerian tax withheld
Convert any Nigerian tax deducted at the same rate as the income it came from. If ₦40,000 was withheld from the May dividend, that is £20 at the assumed rate, entered in column C of SA106.
Why the official naira rate is a separate question
Nigeria's official rate is set in the NFEM; Nairametrics, using CBN data, reported a close of ₦1,332.75 to the dollar on 7 October 2026. That is the Nigerian reference and is quoted against the dollar. For the UK return, follow the SA106 notes and HMRC's own published rates. How the Nigerian rate works is explained in our NFEM guide.
Common mistakes
- Using the net amount. Convert the gross income and the Nigerian tax separately; do not convert only what reached your account.
- Using today's rate for last year's income. The rate is tied to when the income arose, so a rate looked up while filing in January is usually the wrong one.
- Using a parallel market quote. Street or online dealer quotes are not what the SA106 notes point to.
- Converting the whole year's rent at one month's rate when instalments arose in different months. Each instalment has its own date.
- Changing method each year to whichever gives the lower figure. Pick one defensible method and keep it.
Records to keep
- The date each item arose, from the payslip, voucher, statement or tenancy.
- The gross naira amount and any Nigerian tax withheld.
- The rate you used and where it came from, with a screenshot or download of HMRC's table.
- Your sum, item by item, so it can be checked.
- A note of the method you chose, used the same way every year.
For the bigger picture of what to report and where, see declaring Nigerian income on Self Assessment.
Where Pryme fits
Dates are the first thing you need, and they are easiest when income from home lands in one account. A Pryme naira account gives a dated history of each credit, and you can download a verifiable statement to support your figures.
Questions people ask
What exchange rate does HMRC use for foreign income?
HMRC's SA106 notes say to use the exchange rate at the time the income arose, and link to HMRC's published exchange rates.
Can I use HMRC's average exchange rate for Nigerian rent?
The SA106 notes do not mention average rates. If you want to use one for regular income, check with HMRC or an adviser and apply it consistently.
Should I use the rate I actually converted at?
The notes tie conversion to when the income arose, not when you converted it. The rate you received may be different.
Where can I find HMRC exchange rates for the naira?
On the UK Trade Tariff service, which publishes monthly rates and averages released on 31 March and 31 December.
Sources
- SA106 Notes 2026: Foreign, tax year 2025 to 2026, HMRC · accessed Oct 2026
- HMRC average exchange rates, UK Trade Tariff (latest release March 2026) · accessed Oct 2026
- Naira slips to N1,332.75 as NFEM turnover hits $1.01 billion, Nairametrics (8 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.