The euro: Frequently Asked Questions about the euro - Individuals
Contents
General Questions
- What is the euro?
- Which countries have joined the euro?
- Why was 1st January 2002 a significant date for UK individuals and businesses?
- Can a UK tax return be completed in euro?
Payment Questions
- Which tax and national insurance liabilities can I pay in euro?
- What charges will be made for converting euro payments into sterling?
- What exchange rate do I use to convert my sterling tax and national insurance liabilities into a euro amount for payment?
- What happens if the converted amount is either too much or too little?
- If I make tax payments in euro will any repayments be made to me in euro?
- Can I pay my UK tax bill directly from my euro account based in a euro-area country? If so, how?
General Questions
Q. What is the euro?
A. The euro is the European single currency of the twelve euro area countries that have chosen to join. This does not include the UK.
Q. Which countries have joined the euro?
A. The twelve euro area countries are:
- Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain.
Q. Why was 1st January 2002 a significant date for UK individuals and businesses?
A. On 1st January 2002, euro cash was introduced in the twelve euro-area countries. By 28 February 2002, at the latest, their respective national currencies were withdrawn from circulation and have ceased to be legal tender.
Businesses in the UK that have links with the 12 euro-area countries, must now expect to find all financial transactions being carried out in euro.
Q. Can a UK Tax Return be completed in euro?
A. No. All the taxes that the Inland Revenue administers are sterling taxes. Judges have ruled that these taxes can only be assessed and charged in sterling. Therefore, all tax returns must be completed in sterling. If you receive taxable income in euro, or any other foreign currency, it must be converted into sterling. There are no plans for this to change.
For example:
1. If you receive income in euro in the form of monthly interest on
your personal euro bank account, then this should be translated at the
spot rate for the last day of each month. If you receive annual interest,
then this should be translated at the spot rate on the day the interest
is received.
2. If you invoice a business customer for 200 euro, then use the spot
rate for that day to convert to sterling for your accounts, and when
you receive payment of 200 euro, then use the spot rate for that day
to convert. Any difference in the two sterling amounts is an exchange
rate loss or gain that should be reflected in your accounts. Alternatively,
providing the exchange rate has not fluctuated too much, then the monthly
average figure can be used for each transaction instead of the daily
spot rate.
You can find out what the exchange rate was for any particular day (i.e.
the daily spot rate) from the Bank
of England website
Payment Questions
Q. Which tax and national insurance liabilities can I pay in euro?
A. You can pay any tax or national insurance liability in euro, and we will convert the payments into sterling.
You can pay by:
|
CHAPS |
Clearing House Automated Payment System |
|
BACS |
Bankers Automated Clearing System |
|
CHEQUE |
Euro denominated cheque |
|
CASH |
euro (notes only) |
Further details about euro payment procedures can be found in HM Treasury Factsheet 7
Q. What charges will be made for converting euro payments into sterling?
A. We will not pass on to you any of our administrative costs for converting euro into sterling unless it is a euro payment drawn on an overseas bank account. However, we will not meet the risk of any currency value fluctuations.
Q. What exchange rate do I use to convert my sterling tax and national insurance liabilities into a euro amount for payment?
You have to estimate the exchange rate at the time of payment, because the actual rate used is the one in force when the clearing bank presents your payment. This rate cannot be predicted in advance by the Inland Revenue, so we cannot set a rate for you.
There are a number of different sources of information that can help you make an estimate of the exchange rate on the day of payment. These include:
- Bank of England website
- High Street Banks
- HM Customs & Excise Daily Exchange Rates Helpline (01702 366349)
- Ceefax / Teletext
Q. What happens if the converted amount is either too much or too little?
A. The rate of exchange between sterling and the euro can vary
many times during the same day , as with any other currency. The exchange
rate used is the one in force when your payment is presented by the clearing
bank. If the rate used for converting euro into sterling leaves a shortfall,
you may have to pay the difference. If you overpay, any repayment arising
will be made to you in sterling.
Although you cannot totally eliminate the risk of shortfall or overpayment
, you can minimise it by using CHAPS or BACS rather than cheque. Both
of these methods reduce the time it takes for the payment to be cleared
through the banking system.
Q. If I make my tax payments in euro, will any repayments be made in euro?
A. No. All tax repayments are made in sterling, including overpayments due to exchange rate fluctuations.
Q. Can I pay my UK tax bill directly from my euro account based in a euro-area country? If so, how?
A.There are a number of methods of payment that can be used from euro bank accounts held overseas, depending on the value of the payment:
1) A CHAPS transfer to the relevant Inland Revenue bank, which will be accepted for any amount. This is our preferred method of payment from an overseas account, and is also the best method for you to minimise your risk of overpayment or underpayment due to exchange rate fluctuations.
2) A euro cheque (drawn on an overseas euro account), which will be accepted only if your tax liabilities are over £50. (Cheques for less than the equivalent of £50 that are drawn on an overseas euro account would be returned, because of the high bank charges for conversion.)
3) A Eurocheque (from a Eurocheque account) will be accepted providing individual Eurocheques do not exceed the equivalent of £700. (Eurocheques for less than the equivalent of £700 cost the same as a sterling cheque to process, but Eurocheques for more than £700 incur higher bank charges for conversion.) If your tax liabilities exceed £700, then more than one Eurocheque can be submitted for a single tax liability, but each individual Eurocheque should not exceed the equivalent of £700.
CHAPS Payments
If you choose to use the CHAPS method, then you will need the bank details of your Inland Revenue Accounts Office - Cumbernauld or Shipley.
The relevant Accounts Office is shown on your tax demand notice.
Cumbernauld CHAPS Account Details
Sort Code: BKENGB2L
Account Number: 24921211
Shipley CHAPS Account Details
Sort Code: BKENGB2L
Account Number: 24921114
Further details about euro payment procedures can be found in HM Treasury Factsheet 7
| Home | ||||
