Foreign Currency Conversion Rules for Transactions Including Bitcoin and Agreed Exchange Rates

Converting foreign currency consideration into sterling for LTT

For Land Transaction Tax, any consideration given in a currency other than pounds sterling must be converted into sterling before the tax is calculated. The usual rule is to use the closing exchange rate on the transaction’s effective date, but if the parties have clearly agreed a different exchange rate, that agreed rate should be used instead.

• LTT is based on the sterling value of the chargeable consideration, so non-sterling amounts must be translated into pounds.
• The rule applies to foreign national currencies such as euros or US dollars, and also to non-national currencies such as Bitcoin.
• The default position is to use the closing exchange rate on the effective date of the transaction.
• If there is no direct exchange rate into sterling, the amount should be converted through an intermediate currency and then into sterling.
• If the parties have agreed a specific exchange rate in the transaction documents, that rate overrides the London closing exchange rate.
• In practice, it is important to identify the correct effective date and keep evidence of any agreed exchange rate or two-stage conversion method.

Scroll down for the full analysis.

How foreign currency consideration is converted for LTT

If a land transaction is priced in a currency other than sterling, the amount still has to be converted into sterling to work out the Land Transaction Tax position. This matters because the tax is charged by reference to the consideration, and the sterling figure may affect the tax due. The official rule explains which exchange rate to use and when an agreed rate between the parties can be used instead.

What this rule is about

LTT is calculated by reference to chargeable consideration. Where the consideration is not stated in pounds sterling, it must be translated into sterling before the tax can be worked out. This can arise with ordinary foreign currencies, such as euros or US dollars, and also with non-national currencies, including Bitcoin.

The rule is concerned with timing and valuation. It tells you the date by reference to which the conversion is made, and it also deals with cases where there is no direct sterling exchange rate and an intermediate conversion is needed.

What the official source says

The source states that where consideration is expressed in another currency, the amount is ascertained by reference to the closing exchange rate on the effective date of the transaction. This applies to foreign national currencies and also to non-national currencies such as Bitcoin.

If the amount cannot be converted directly into sterling, and it is necessary to convert it first into another currency and then into sterling, both conversions must be carried out.

The source also says that if the parties have agreed an exchange rate that differs from the London closing exchange rate, the agreed rate should be used.

What this means in practice

The starting point is simple: identify the amount of consideration, identify the effective date of the transaction, and convert the amount into sterling using the closing exchange rate for that date.

In many cases, this will be straightforward. For example, if the purchase price is stated in euros, the euro amount is converted into pounds using the relevant closing rate on the effective date.

The rule is not limited to conventional currencies. If consideration is given in something like Bitcoin, the same approach applies. You still need a sterling value, and if there is no direct sterling rate available, you may need to convert first into another currency and then into sterling.

The point about an agreed rate is important. The official material says that where the parties have agreed a rate different from the London closing exchange rate, that agreed rate should be used. In practice, that means the contractual exchange rate may displace the market closing rate, provided there is in fact an agreed rate between the parties.

How to analyse it

A sensible way to approach this is:

• Identify whether any part of the consideration is expressed in a currency other than sterling.
• Work out the effective date of the transaction, because that is the relevant date for conversion.
• Check whether there is a direct closing exchange rate into sterling for that currency on that date.
• If there is no direct sterling rate, identify the necessary intermediate conversion and perform both steps.
• Review the transaction documents to see whether the parties agreed a specific exchange rate.
• If an agreed rate exists and differs from the London closing exchange rate, use the agreed rate in line with the official source.

The key practical question is not just what the market rate was, but whether the parties fixed a different rate as part of the transaction terms.

Example

Illustration: A buyer agrees to acquire Welsh land for an amount stated in euros. The effective date of the transaction is 30 September. To calculate LTT, the euro amount is converted into sterling using the closing exchange rate on 30 September. If the contract instead states that, for the purposes of the transaction, the euro price is to be converted at a specific agreed exchange rate, the official source indicates that the agreed rate should be used instead of the London closing rate.

Illustration: A transaction is priced in Bitcoin and there is no direct sterling closing rate available that can be used. The amount may need to be converted first into, say, US dollars and then from US dollars into sterling. Both conversions are part of arriving at the sterling consideration.

Why this can be difficult in practice

The source gives the core rule, but some cases may still need careful judgement.

One difficulty is identifying the effective date of the transaction, because the conversion date depends on it. The source here assumes that date is already known.

Another is evidential. If the parties say they agreed a rate different from the London closing exchange rate, the transaction documents should support that. A rate that was merely discussed, or used informally for commercial planning, may be harder to establish than a rate clearly fixed in the contract.

Non-national currencies can also create practical issues. The source confirms that they are covered, but valuation data, market sources, and conversion methodology may be less straightforward than for widely traded national currencies. Where a two-stage conversion is needed, both stages should be identifiable and supportable.

Key takeaways

• Foreign currency consideration must be converted into sterling for LTT purposes.
• The default rule is to use the closing exchange rate on the effective date of the transaction.
• If the parties agreed a different exchange rate, the official source says that agreed rate should be used.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Foreign Currency Conversion Rules for Transactions Including Bitcoin and Agreed Exchange Rates

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