Janet Rubin Australia Member (2008) German to English
More than a feeling
Aug 10, 2010
Claire Cox wrote:
I'm certainly impressed at the moment ... In any event, I shan't be closing my NatWest account just yet ... Not only have they promised £100 for switching (as long as you pay in that £1500 a month within 3 months of the switchover), but they also promise to pay you £100 and help you switch again if you're not happy after 6 months of switching.
I always get very uncomfortable about closing accounts myself (unless they're charging me fees, which I can usually manage to avoid), I think because of all the rigamarole (and fine print) you have to wade through just to open them.
Also, it's nice to have that "extra" account - they say (in your case) £1500 has to come in, but if you have a lean month and some extra sitting in savings in another account, you can always just transfer back and forth - as long as your minimum is coming in, they didn't say anything about it going out again!
And, oh boy, sorry about the typo - hopefully no bank you have ever gone to has tried to charge you a 'feel'!
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Sonia Atkinson United Kingdom Local time: 20:53 Member (2010) Italian to English + ...
@ Wendy and my experience with First Direct
Aug 10, 2010
Wendy Leech wrote:
This is what I was told too. But it therefore means that you pretty much have to use the accural basis, surely? Since if you are only accounting the sterling amount once you receive payment, this would not be possible if an invoice is not paid in the same tax year that it was issued.
Hi Wendy,
Apologies for the very late reply. I've only just caught up with this thread. Basically, I do the same as Claire and just wait for all my invoices to have been paid before doing my accounts for the April - April financial year. I usually do my accounts in August or thereabouts, as they don't have to be in until January.
As I said before, I bank with First Direct and am very happy with them so far. The new T&Cs regarding the £10 monthly charge don't affect me, as we have a mortgage with them, so I don't have to receive £1500 into my account each month. Obviously I normally receive far more than this anyway, but it would have been a problem when I was on maternity leave last year.
As regards the charges, I have never been charged anything for foreign currency payments from any country, but I have been charged for payments in sterling from foreign countries - I always make sure I charge my clients in their local currency now!
[Edited at 2010-08-10 14:38 GMT]
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Wendy Leech United Kingdom Local time: 20:53 Member (2006) Spanish to English + ...
TOPIC STARTER
update
Aug 10, 2010
I asked a few of my biggest (in terms of average income they provide me each month) clients if they would consider paying me in sterling instead of Euros.
They all apologised for any inconvenience it was causing me but said it would not be possible, as they do not have sterling accounts and it would cost them too much to do so. So basically either I lose or they lose - and since they are the ones holding the cheque book - its me!
I will just have to continue as I have always done - taking the rough with the smooth and hoping that the interest rate changes again so i can recoup some of the losses I have been making so far - if I can at least draw even, then I'll be ok!
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G Talamini United Kingdom Local time: 20:53 English to Italian + ...
Exchange rate loss a business expense?
Jan 18
Sorry for resurrecting an old thread but I'm a bit confused on a point: when using accrual accounting, can I claim the difference (well, the loss) between the income I officially received according to the HMRC exchange rate and what I actually earned as a business expense?
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Charlie Bavington United Kingdom Local time: 20:53 French to English
Exchange rate gains as income?
Jan 18
Have you, in the past, been in the habit of reporting any exchange rate gains as income?
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G Talamini United Kingdom Local time: 20:53 English to Italian + ...
RE: Exchange rate gains as income?
Jan 18
No, as this is my first year as a freelancer in the UK and have yet to complete a tax return
But I guess your analogy makes sense, thank you!
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Tom in London United Kingdom Local time: 20:53 Member (2008) Italian to English
What you actually get
Jan 18
l u m i wrote:
No, as this is my first year as a freelancer in the UK and have yet to complete a tax return
But I guess your analogy makes sense, thank you!
Simply record what you actually get, in GBP, as your taxable income. This should be supported by the letter your bank should send you for each transaction, mentioning the amount received in Euro, how much the bank took off, what the exchange rate was on that day, and the final amount credited to your account.
My bank sends me a letter like this for each transfer I receive. I assume all banks do it.
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Charlie Bavington United Kingdom Local time: 20:53 French to English
Accrual versus cash accounting
Jan 18
Tom in London wrote:
Simply record what you actually get, in GBP, as your taxable income.
That's cash accounting. L u m i is using accrual accounting which is, I believe, the method hMRC prefer us to use.
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Katalin Horvath McClure United States Local time: 15:53 Member (2002) English to Hungarian + ...
Ask a professional accountant
Jan 18
The best would be to ask a professional accountant who is familiar with all the details of the given tax jurisdiction.
My logic says that currency conversion gains and losses will count as revenues and expenses, the question is how exactly they need to be recorded on the books, what kind of journal entries would be used.
One method is to periodically revalue the balances of all accounts that are denominated in foreign currencies (that includes receivables and payables). This way pending transactions will always be current in terms of their value in the domestic currency. In this case a revaluation adjustment account is used to record the difference. Another method may be to keep each transaction at its original value and adjust only when the offsetting transaction is recorded (when payment occurs). In this case a revenue or expense account would be used to record the difference directly. I believe if this method is used the accounts would have to be re-evaluated at least at the time of closing the books (end of year).
But again, it is best to be left to a professional.
Katalin
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No, as this is my first year as a freelancer in the UK and have yet to complete a tax return
But I guess your analogy makes sense, thank you!
Simply record what you actually get, in GBP, as your taxable income. This should be supported by the letter your bank should send you for each transaction, mentioning the amount received in Euro, how much the bank took off, what the exchange rate was on that day, and the final amount credited to your account.
My bank sends me a letter like this for each transfer I receive. I assume all banks do it.
Are you sure you should still being using cash accounting?
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