Almost every creator earning real money has a payer that does not pay in pounds. AdSense settles in dollars. Twitch, Patreon and most of the app stores settle in dollars. A German sponsor pays in euros. The money lands in a UK bank in sterling, usually a bit shorter than the invoice, and nobody writes down the rate that got it there.

Then the return asks for sterling figures, and there are three defensible answers to "what was that $6,000 worth?" — all of them different. Choose carelessly and you understate your turnover, and turnover is the number two separate thresholds are tested against.

HMRC does not hand you one rate

People expect a lookup table. There isn't one. HMRC's business income manual says its published London closing rates are "not an 'official' rate" and that businesses may use others — a rate quoted by your bank, or the monthly average rates HMRC publishes for VAT. The rates used in your business accounts are accepted for working out trading profits provided they follow normal accounting practice, and HMRC only takes issue where a rate diverges markedly from reputable sources.

So the freedom is genuine. The catch is what comes with it: freedom without a written method is how one year ends up recorded three different ways. Pick a source, write down which one it is, use it for every transaction and every currency for the whole year, and keep the evidence. That is the entire compliance test, and it takes about a minute to satisfy.

Where HMRC's own rates live

Two sets, both free, both dated, both perfectly acceptable to use.

  • Monthly rates. Published on the penultimate Thursday of each month and applying to the following calendar month, at trade-tariff.service.gov.uk/exchange_rates/monthly. One rate per currency per month, which suits a creator recording income transaction by transaction.
  • Yearly average rates. Published on 31 March and 31 December, each covering the previous twelve months, at trade-tariff.service.gov.uk/exchange_rates/average. One rate for the whole year, which suits income arriving in a steady monthly drip — AdSense, subscriptions, memberships.

Either is defensible. Moving between them mid-year, picking whichever flatters a particular deal, is the one approach guaranteed not to survive a question.

Which date does the rate attach to?

Before you can choose a rate you have to know which day you are converting on, and that is decided by your accounting basis rather than by the currency.

  • Cash basis — the default for sole traders and partnerships since the 2024/25 tax year — converts on the day the money reaches you.
  • Accruals converts on the day the income is earned, normally the invoice date, whenever the brand actually pays.

Same deal, two different dates, two different rates, and sometimes two different tax years. Our post on invoiced in March, paid in June covers which basis you are on and how to change it.

$6,000 US brand deal invoiced 14 May 2026, paid 27 June 2026 ACCRUALS Rate on the invoice date, 14 May: 1.29 £4,651 CASH BASIS Rate on the payment date, 27 June: 1.34 £4,478 WHAT LANDED After a 3% conversion margin on the payout £4,347 On a cash basis return: £4,478 of income, £131 of conversion cost as an expense. The £4,347 in the bank is not your income. It is your income minus a business cost. Illustrative rates.
One invoice, three sterling figures. Only one of them belongs on the return.

The conversion margin is an expense, not a discount

This is the part that quietly costs creators money, and it is the same gross-versus-net habit that governs keeping one set of books across five platforms. When a platform or payment provider converts your dollars, it does not use the mid-market rate. It uses a rate a few percent worse and keeps the difference. That difference is a cost of doing business — deductible, like any other bank charge.

Record the gross amount at your chosen rate and the margin as an expense, and your profit is the same as if you had simply banked the net. Your turnover is not.

Worked example — one creator, three currencies. Illustrative figures and rates for 2026/27.

A creator earns $62,400 of AdSense across the year, a $7,500 US brand deal, €9,500 from a German sponsor and £22,000 from UK brands. Converting at illustrative annual averages of 1.32 to the dollar and 1.17 to the euro: AdSense £47,273, the US deal £5,682, the sponsor £8,120, plus the UK work.

Turnover: £83,075. Of that, £61,075 arrived in foreign currency, and roughly £1,832 of it was taken as conversion margin before the money reached the bank. Recorded from the bank statements alone, the books show about £81,243 of income and no conversion cost at all. The profit is identical. The turnover is £1,832 lower than the truth, which is £1,832 closer to the £90,000 VAT line than the creator believes.

Now change one thing. Had the pound been weaker across the year — 1.26 to the dollar rather than 1.32 — the same $69,900 would have been £55,476 instead of £52,955. Turnover £85,596, on identical work. Nothing in the business changed. The rate did.

Two thresholds care about that figure: the £90,000 VAT registration threshold, tested on any rolling twelve months, and Making Tax Digital, which applies to sole traders with qualifying income over £50,000 from 6 April 2026, over £30,000 from April 2027 and over £20,000 from April 2028. Qualifying income is turnover, not profit. A creator sitting in the mid-eighties in sterling should be updating a rolling turnover figure monthly on gross amounts, not discovering the position in January. The creator VAT guide covers what registration actually involves.

Holding a dollar balance

Plenty of creators leave earnings in a dollar wallet, either to pay dollar costs or in the hope of a better rate later. Two things follow.

First, waiting does not defer the tax. The income arose when it arose, converted at that date's rate under your chosen method. Keeping it in dollars for eight months changes nothing about the year it is taxed in.

Second, the gain or loss on the balance itself. For individuals, capital gains tax on foreign currency bank accounts was removed for withdrawals made on or after 6 April 2012: no chargeable gain and no allowable loss arises when you take money out of a foreign currency account. Companies are treated differently — exchange differences on money and debts generally follow the accounts under the loan relationship rules, so a company sitting on a large dollar balance has movements running through its taxable profit each year. It is one more line in the sole trader versus limited company decision, and one more reason that decision is closer to a wash than the internet suggests.

If you are VAT registered, the rules tighten

The flexibility above applies to working out trading profits. VAT is stricter, and the rule has force of law. There are two standard ways to convert: the UK market selling rate at the time of the supply, with rates published in national newspapers accepted, or the exchange rates HMRC publishes — the period rate of exchange, which lets you use one rate for a whole calendar month. Any other method needs HMRC's approval before you use it for VAT accounting.

And where UK VAT is due, an invoice issued in a foreign currency must still show the total VAT payable in sterling. Invoicing a US brand in dollars is fine; leaving the VAT line in dollars is not.

The withholding trap sitting next to this one

One more reason to record gross. If a US platform has deducted withholding tax before paying you, the shortfall in your bank is not an exchange rate problem and no rate you choose will explain it. A UK creator's AdSense royalties should carry 0% US withholding under the UK–US treaty, and a missing or expired form is worth thousands a year — see fixing your W-8BEN. Currency conversion and withholding are separate lines. Netting both off the top hides both.

What to do this week

  1. Write down your method in one sentence: which rate source, and which date. "HMRC monthly rates, on the date each payment is received" is a complete answer.
  2. Bookmark the rate page you chose, and save the month's figures for the currencies you actually earn in. It takes thirty seconds a month.
  3. Pull one foreign payout statement and find the gross amount, the conversion rate applied and any withholding. If the statement only shows the net, ask the platform for the detail — you are entitled to it and you need it.
  4. Check the two lines are separate in your books: gross income at your chosen rate, conversion margin as an expense. If your income line matches your bank deposits exactly, they are not.
  5. Recalculate your rolling twelve-month turnover on gross sterling figures, and run the year through the free creator tax calculator. Then read the creator tax guide for how the rest fits together.

None of this is difficult. It is just invisible — the rate is chosen for you by a payment provider, the evidence disappears into a payout summary, and the error only surfaces when a threshold has already been crossed. We set the method once for every creator earning in more than one currency, and it holds for every year after that. Get started with us from £19 + VAT a month, or see the pricing page.