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The short answer
For most people, no. Since 6 April 2012, HMRC's manual says foreign currency held in a bank account by an individual does not give rise to chargeable gains or losses. Foreign currency notes and coins are a chargeable asset, but currency bought for your personal spending abroad, including keeping a home abroad, is exempt. Gains on naira cash held as an investment could in principle be taxable.
The naira's fall against the pound means most diaspora conversions produce a loss in pound terms, not a gain. But people who bought naira cheaply, or who hold dollars or euros that rose against sterling, sometimes ask whether converting creates a capital gain. HMRC's Capital Gains Manual answers most of it. This guide sets out the rules. It is information, not tax advice.
Foreign currency is an asset for CGT
HMRC's manual at CG78300 (updated October 2026) says currency other than sterling is a chargeable asset, so disposing of it can produce a chargeable gain or an allowable loss. The allowable cost is the sterling value when you acquired the currency. That sounds far-reaching. Two rules take most people out of it.
Rule one: bank accounts
CG78320 says that from 6 April 2012, foreign currency bank accounts held by individuals, trustees and personal representatives are treated like simple debts, which 'will not give rise to chargeable gains (or allowable losses) in the hands of the original creditor'. Before that date, gains on such accounts could be chargeable.
So naira, dollars or euros sitting in a bank account and converted to pounds do not normally produce a chargeable gain or loss for an individual. That covers most diaspora conversions.
Rule two: money for spending abroad
CG78315 explains section 269 of the Taxation of Chargeable Gains Act 1992: gains on foreign currency an individual acquired for personal expenditure outside the UK, by themselves, family or dependants, are not chargeable. HMRC says this includes spending on providing or maintaining a home abroad. Currency received as pay, interest, dividends or other sums does not qualify, and is treated normally.
| Situation | CGT position |
|---|---|
| Naira in a Nigerian bank account converted to pounds | No chargeable gain or loss since 6 April 2012 |
| Pounds in a UK currency account converted to dollars | No chargeable gain or loss since 6 April 2012 |
| Naira notes bought for a December trip home | Exempt as personal expenditure abroad |
| Naira notes sent for upkeep of your house in Nigeria | Exempt as maintaining a home abroad |
| Dollar notes held at home as an investment, later sold | Potentially a chargeable gain or loss |
| Cryptocurrency, including stablecoins | Separate cryptoasset rules |
Worked example
Example. Segun keeps $10,000 in a Nigerian domiciliary account, bought years ago when it cost him £6,500. He converts it when it is worth £7,800.
- Under CG78320, the dollar bank balance is treated as a simple debt, so there is no chargeable gain on the £1,300 rise.
- Had he kept $10,000 in notes in a safe as an investment, the same £1,300 could be a chargeable gain, set against his annual CGT allowance.
- Interest the account earned is separate: it is income, taxable as foreign interest.
What about income received in naira?
Converting does not change how income is taxed. Rent, salary or interest paid in naira is income when it arises, converted to pounds at the rate on that date, as HMRC's SA106 notes require; see which HMRC rate to use. Later movements in the rate are not extra income, and under the bank account rule they are not a capital gain either.
Gains on assets bought in naira
The currency rules are different from gains on assets. If you sell Nigerian land or shares, the gain for UK CGT is worked out in pounds, using the sterling value of the cost when you bought and of the proceeds when you sold. Because the naira has weakened, a large naira gain can be a small sterling gain or a loss. GOV.UK confirms you may have to pay CGT even if your asset is overseas. See working out a Nigerian land gain in pounds.
Records to keep
- For any currency held as notes, the date and sterling cost of buying it and what it was for.
- For bank balances, statements showing where the money came from, so income such as interest or rent can be separated from capital.
- For assets bought in naira, the purchase date, the naira price and the exchange rate on that date, which you will need when you sell.
- For crypto, HMRC's separate cryptoasset rules and records.
Clear records also help when a UK bank or solicitor asks for source of funds on a large transfer from Nigeria, which is a separate question from tax.
What is not settled
The manual speaks of bank accounts. Whether a balance with an e-money or other non-bank provider counts as a 'bank account' for this rule is not addressed in the pages we read. If a large sum turns on it, ask HMRC or an adviser.
Where Pryme fits
Pryme holds naira, pounds, dollars and euros in one account, and Swap converts only when you choose, showing the rate and the fee first. Pryme is not a bank, so apply the uncertainty above to large balances. For moving savings home, see converting naira savings to pounds and multicurrency accounts.
Questions people ask
Do I pay capital gains tax when I convert naira to pounds?
Not usually. HMRC's manual says foreign currency bank accounts held by individuals do not give rise to chargeable gains or losses since 6 April 2012.
Is foreign cash a chargeable asset?
Yes, foreign currency is a chargeable asset, but currency acquired for personal spending abroad, including maintaining a home abroad, is exempt.
Can I claim a loss because the naira fell?
Not on a bank balance, because those balances give no allowable loss either. A loss on an asset such as land is worked out in pounds.
Is profit on a dollar account taxable when I convert it?
The currency movement on a bank balance is not a chargeable gain. Interest earned on the account is taxable as income.
Sources
- HMRC Capital Gains Manual CG78300: foreign currency (updated Oct 2026) · accessed Oct 2026
- HMRC Capital Gains Manual CG78320: foreign currency bank accounts · accessed Oct 2026
- HMRC Capital Gains Manual CG78315: currency for personal expenditure abroad · accessed Oct 2026
- HMRC SA106 Foreign notes 2026 · accessed Oct 2026
- GOV.UK: Capital Gains Tax, what you pay it on · 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.