News & Blog


In the news recently there has been discussion of the way in which foreign holidays have become more expensive as currency exchange rates have fallen due to fears over the potential impact of a no deal Brexit.

Whilst this is obviously something that nobody really wants to see, if you are on holiday for just a couple of weeks in the year you can probably cope with the increased cost, however if you have invested rather more in your continental holidays, perhaps by having bought a holiday home in France or Spain, then you could be faced with a whole series of difficulties.

Your overseas holiday home

Let’s suppose that you bought your holiday home for 250,000 in 2007 when the exchange rate was 1.5 to the pound.

Let’s say that there are running costs associated with it of 4,500 which originally came to £3,000 per year, the bill now without any inflation is £4,090!

Hopefully you didn’t need to borrow money in Euro for the purchase as that would also have a similar 1/3 increase in the cost, even if that has been helped by a decline in interest rates over the period.

And the cost of visiting your holiday home and eating and going out while you are there will also have increased by that same 1/3.

It might all be getting too expensive, you had thought of retiring there as the cost of living was so reasonable, but with all your income in sterling, that is no longer the case and you don’t really know what will happen after Brexit either.

Selling the holiday home

So you decide that you need to sell, the market for the property is a bit depressed and you find that you can probably only get 240,000 for the property, another loss, but at least no Capital Gains Tax (CGT) to pay or so you might think.


That is not the way CGT works for assets bought in a foreign currency, you do not calculate the gain or loss in the foreign currency and convert that into sterling and pay the tax on the sterling amount. In my example a loss of 10,000.

What you are required to do is convert the cost (at the date of purchase), convert the sale price (at the date of sale) and look at the difference between the two.

Doing that we get the following computation:



Exchange Rate



Sale Price













In my example with an economic loss of 10,000, because of the exchange rate changes there is a taxable gain of over £50,000 and possible tax of over £14,000.

As with any potential capital transaction it is worthwhile speaking to your local Thomas Westcott office to make sure that you understand just what tax you could be liable to pay, so avoiding any nasty surprises.


If you would like to speak to myself or one of our team, you can contact us HERE.