Selling a property abroad? The tax bill nobody warns you about
On 1 July 2015 a pound bought 1.4072 euros. On 22 September this year it bought 1.1664. Both are Bank of England daily spot rates. The gap is seventeen per cent.
Buy a house in the Dordogne on the first of those dates, sell it eleven years later for the same number of euros, and you've made nothing. The agent's valuation hasn't budged. Your French bank statement says you're square. HMRC says you owe the best part of ten thousand pounds.
It isn't a loophole and it isn't new. It's how capital gains tax has always worked, and it catches people who bought in France or Spain before the referendum.
Why a flat sale price is still a gain
HMRC does its sums in sterling. Not in euros, and not by working out the gain abroad and converting the answer at the end. Its Capital Gains Manual is unambiguous. You convert what you paid at the rate in force on the day you bought, and what you sold for at the rate in force on the day you sold. The difference is your gain.
It goes further and tells its own officers not to accept any other method, citing Bentley v Pike and Capcount Trading v Evans, two cases that settled the point decades ago.
So the currency isn't a footnote to the calculation. It is the calculation. If sterling has weakened since you bought, the sterling value of the same euro price has risen, and that rise is a chargeable gain whether or not the house is worth a cent more.
What selling a property abroad actually costs
Take a house bought for 300,000 euros on 1 July 2015 and sold for 300,000 euros on 22 September 2026. The figures are illustrative, built from published Bank of England daily spot rates. No two sales are alike.
Cost in sterling, £213,180. Proceeds in sterling, £257,190. Chargeable gain, £44,010.
Knock off the annual exempt amount, £3,000 for 2026 to 2027, and you're taxed on £41,010. At 24 per cent, the rate for a higher rate taxpayer from 6 April 2026, that's £9,842. At 18 per cent, if the gain sits inside your basic rate band, £7,382.
That example is stripped to two numbers, and both omissions run in your favour. Notaire's fees, agent's commission and capital improvements are allowable costs, each converted at the rate on its own date, so a real gain lands lower than £44,010. It also assumes you were UK resident throughout and never lived in the place. If you did, private residence relief changes the picture entirely.
There may be French tax on the sale as well, and relief under the double taxation treaty if you're taxed in both places. That's a question for somebody qualified, which this isn't.
One deadline runs the opposite way to what people expect. The 60-day reporting rule applies to residential property in the UK. An overseas sale goes on your Self Assessment return for the tax year, which for a sale today means 31 January 2028. Longer than you'd think, and quite long enough to forget.
Then you have to get the money home
Here's where it stops being HMRC's problem and becomes yours.
Three hundred thousand euros is worth £257,190 at that published rate. You won't get that, and shouldn't expect to. Everybody who converts currency for a living earns something on the rate, us included. The question is how wide the margin is, and whether anyone told you.
Two per cent of that transfer is £5,144. Half a per cent is £1,286. Same money, same afternoon, £3,858 between them, and nothing on the confirmation says so.
So ask it plainly. What rate am I getting, what published rate are you measuring it against, and what is the difference between the two? A provider who won't answer has answered. We've written before about why the mid-market rate is a slipperier phrase than it looks, and if you've never moved a sum this size, what actually happens behind the scenes on an international transfer is worth ten minutes.
What to do, in this order
Talk to somebody qualified about the tax before the sale completes rather than after. If you have an accountant, start there. If not, the Law Society's Find a Solicitor directory is free to search, and a chartered tax adviser can take on the cross-border part. For the mechanics of filing rather than the planning, HMRC's Self Assessment helpline is 0300 200 3310, Monday to Friday, 8am to 6pm, and costs nothing. MoneyHelper, free from the Money and Pensions Service, is on 0800 011 3797.
Then deal with the currency separately, and earlier than feels necessary. A completion date that slips by six weeks is a six-week currency position nobody chose to take. A forward contract lets you fix a rate now for a date later, worth a conversation before the money lands rather than after. Our guide to what you need in place before sending money abroad covers the paperwork, which is usually what holds things up.
On our own position, since it matters here. Pathfinder isn't directly authorised by the FCA. We work through FCA authorised partners, who hold and safeguard client money, and we don't run a proprietary book. If a firm's regulatory standing isn't obvious from its website, ask.
The galling part is that the arithmetic runs both ways. Eleven years of sterling weakness hands you the tax bill, and the same eleven years make the house harder to afford for the British couple buying it from you. Somewhere in the Dordogne, that conversation is already under way.
Get in touch
If you're selling a property abroad and want to talk the currency side through before you're tied to a completion date, we're easy to reach.
Pathfinder FX
1 Knights Court, Archers Way, Battlefield Enterprise Park, Shrewsbury, SY1 3GA
+44 (0)1743 290955
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