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The short answer
HMRC's foreign pages notes say to convert foreign income into pounds "using the exchange rate at the time the income arose", and they point to HMRC's published exchange rates. In practice that means a rate for the date or month each payment of naira rent, interest or dividend was received; HMRC publishes monthly rates and yearly averages on the UK Trade Tariff service. Whatever you use, use it consistently and keep a note of the source.
If you earn naira and file a UK return, every figure on the foreign pages has to be in pounds. That sounds simple until you notice how far the naira has moved. Secondary sources citing Reuters and the CBN record falls from around ₦600 to the dollar in June 2023 to about ₦1,600 by July 2024. A single annual rate can badly misstate income received at different points in such a year.
What HMRC says
The SA106 notes for 2026 tell you to "convert the income into UK pounds using the exchange rate at the time the income arose", with a link to HMRC's exchange rates. For income that could not be brought out of the country, the notes say to convert it at the rate when the restriction ended. The notes do not set out a single required source for the rate.
HMRC's published rates
| Rate | What it is | Where |
|---|---|---|
| Monthly | Published on the penultimate Thursday of each month, applying to the following calendar month, based on rates at midday the day before publication | UK Trade Tariff, exchange rates |
| Yearly average | Mean of the 12 monthly rates, published for years to 31 March and 31 December | UK Trade Tariff, average rates |
| Spot | Rates at particular dates | UK Trade Tariff |
The Trade Tariff pages describe these rates as for working out the customs value of imports. The old GOV.UK collection for customs and VAT rates was withdrawn on 20 October 2023 when the rates moved to the Trade Tariff. People commonly use them for income tax too because the SA106 notes link to HMRC exchange rates, but we found no HMRC statement on the pages we opened that a yearly average is acceptable for Self Assessment in every case. Check the naira is in the file you download.
Choosing a method
- Rate on the day received. Closest to the wording "at the time the income arose". Works well for a few large items: an annual rent paid in advance, a dividend.
- HMRC monthly rate for the month received. A practical version of the same idea when payments are spread out.
- The rate actually applied when you converted. If the naira was converted to pounds on receipt, the conversion record is strong evidence of the sterling value.
- A yearly average. Simplest, but in a year of big swings it can misstate income. HMRC's business manual, BIM39510, allows average rates for business accounts only where rates do not fluctuate significantly, which is a useful warning sign even though it is written for businesses.
Worked example
Example only, with invented rates. Your Lekki tenant pays ₦4,800,000 rent in advance on 1 March. The monthly rate for March is ₦2,000 to £1, so the sterling figure is £2,400. If you had used a yearly average of ₦1,800, you would report £2,667, about £267 more income. Expenses paid in naira in other months are converted at their own month's rate, not March's.
Converting foreign tax
Nigerian tax deducted from the income, such as withholding tax on rent or dividends, is converted at the same rate as the income it relates to. That figure feeds foreign tax credit relief, which HMRC's HS263 helpsheet limits to the lower of the foreign tax and the UK tax on the same income. See NGX dividends and withholding credit and Nigerian tenants deducting WHT.
Mistakes that cause trouble
- Using today's rate for last year's income. The rule looks to when the income arose, not when you file.
- Using a parallel-market rate without a record. If you rely on a rate that is not from HMRC or your own conversion, keep evidence of where it came from.
- Mixing methods between years without a reason. Switching to whichever method gives a lower figure invites questions.
- Forgetting the expenses. Repairs and agent fees paid in naira need converting too, at their own dates.
Records to keep
- The naira amount and date of each receipt and expense.
- The rate used and its source (HMRC monthly file, bank conversion record).
- A note of the method, kept with your tax papers.
- Statements showing the naira entries.
For the bigger picture on reporting Nigerian income, see declaring Nigerian income on Self Assessment.
Where Pryme fits
When you convert naira to pounds with Swap, the rate and the fee are shown before you approve, and the conversion is recorded with its date, which gives you a sterling value for that receipt. A Pryme account holds NGN and GBP side by side; see the multicurrency account.
Questions people ask
What exchange rate should I use for Nigerian income on my UK tax return?
HMRC's SA106 notes say to use the rate at the time the income arose. Many people use HMRC's monthly rate for the month received, or the rate actually applied when they converted.
Can I use HMRC's yearly average rate for naira?
HMRC publishes yearly averages, but the SA106 notes do not say an average is always acceptable. In a year of large naira swings it can misstate income; a monthly or actual rate is closer to the rule.
Where do I find HMRC exchange rates?
On the UK Trade Tariff service, which publishes monthly rates, yearly averages and spot rates.
Do I convert expenses at the same rate as rent?
Convert each item at the rate for when it arose. Foreign tax is converted at the rate used for the income it relates to.
Sources
- HMRC: SA106 Foreign notes 2026 · accessed Oct 2026
- UK Trade Tariff: HMRC monthly exchange rates · accessed Oct 2026
- UK Trade Tariff: HMRC average exchange rates · accessed Oct 2026
- HMRC Business Income Manual BIM39510: foreign exchange, accounting (updated 4 Aug 2026) · accessed Oct 2026
- Wikipedia: Nigerian naira (citing FT, Reuters, CBN) · accessed Oct 2026
- HMRC: Relief for foreign tax paid 2026 (HS263) · accessed Oct 2026
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