Paid in Euros? How to Report Euro Income on Self Assessment

Charlotte Baroukh

Tax Expert @ Pie

5 min read

If you’re a UK-based sole trader paid in euros by overseas clients, you generally need to report the income as self-employment income and convert the payments into pounds sterling for your Self Assessment. The article explains how to record euro payments, choose an appropriate exchange rate, understand when SA106 may be relevant, and keep invoices and payment records organised. It also shows how to add the converted income to the Pie Tax App using Quick Add → Add Income, attach your invoice and keep everything ready for filing.

Paid in Euros? How to Report Euro Income

Getting paid in euros can be a great way to work with overseas clients, but if you complete a UK Self Assessment tax return, your income generally needs to be reported in pounds sterling.

If you receive income in euros, you’ll need to keep track of your payments and work out their sterling value for your tax return.

The key is understanding how the income should be treated for UK tax purposes and how to convert it into pounds.

How to Declare Euro Income on Self Assessment

If you receive income in euros and need to complete Self Assessment, there are two key things to understand.

First, the income still needs to be considered for UK tax purposes. HMRC says UK residents usually need to complete a Self Assessment tax return if they have foreign income or capital gains, although specific exceptions and different rules can apply.

Second, your Self Assessment figures need to be in pounds sterling. You should not simply enter €10,000 into a sterling income box on your tax return. You need to convert the relevant income into pounds using an appropriate exchange rate and keep a record of how you calculated the figure.

HMRC guidance states that foreign income is converted into sterling for the necessary calculations, while its business-income guidance explains that appropriate exchange rates can be used when translating foreign currency transactions.

How to Convert Euros Into Pounds

Although your client may pay you in euros, your UK Self Assessment figures must be reported in pounds sterling. You’ll need to convert your euro income into sterling when preparing your tax return.

Keep a record of the original euro amount, payment date, exchange rate used and resulting sterling amount. HMRC publishes exchange-rate information you can use when converting foreign currency.

For example, a €2,500 payment should be converted into its appropriate sterling equivalent rather than entered as €2,500.

The key is to use a reasonable, consistent approach and keep records showing how you calculated your sterling figures.

How Self-Employed Euro Income Works

If you’re a UK-based sole trader and overseas clients pay you in euros, the payments will generally form part of your self-employed trading income. Your customer being based abroad doesn’t automatically mean you should report the income as foreign income.

For example, if you complete all your work from the UK for clients in Germany, France and Spain, payments received in euros would generally be treated as trading income and converted into sterling for your UK tax calculations.

Your taxable profit is based on your business income less allowable expenses, with the correct treatment depending on your accounting method. Keeping clear records of your invoices, payments and expenses will help you report the right figures.

When Could SA106 Be Relevant?

The fact that you are paid in euros does not automatically mean you need to complete the SA106 foreign pages. For a UK-based sole trader receiving payment from an overseas client for work carried out as part of their UK business, the trading income would generally be reported through the self-employment pages.

SA106 can become relevant where you have genuine foreign income that falls within the foreign income sections, such as certain overseas interest, dividends, pensions or property income. It can also be relevant where you have paid tax overseas and need to claim Foreign Tax Credit Relief.

For example, imagine your UK business earns €20,000 from clients in France. You carry out the work from the UK and no French tax is deducted from your payments. The fact that your clients are French does not, by itself, mean you should put the €20,000 on SA106. It would generally form part of your self-employed trading income.

However, if foreign tax has actually been deducted from income and you are eligible to claim relief for that tax, the foreign tax and credit relief rules need to be considered separately. This is where the distinction between ordinary trading income and foreign income becomes particularly important.

Helpful Tips for Euro Income Records

Keep a record of every euro payment, including the client, invoice, payment date, original euro amount and sterling value used for your accounts.

Keep your invoices, bank statements and payment confirmations together. These records can help you reconcile your business income and explain the figures included on your Self Assessment.

Record the exchange-rate method you used when converting your euro payments into pounds. Doing this throughout the tax year is much easier than trying to calculate everything shortly before your Self Assessment deadline.

What To Check Before Filing Self Assessment

Before completing your tax return, identify what your euro payments represent. If you’re a UK-based sole trader and they’re for business services, they’ll generally be treated as self-employment income.

Calculate the sterling value using an appropriate exchange rate and keep a record showing how you arrived at the figure.

Also check whether you have other foreign income or foreign tax paid. Foreign interest, dividends and income taxed overseas may need separate consideration, including Foreign Tax Credit Relief.

If you’re unsure what to include, the Pie Tax App and Expert Tax Assistants can help you organise your information and understand what needs to go on your Self Assessment.

Getting Paid in Euros and Self Assessment

If you’re paid in euros, you still need to report your income in pounds sterling on your UK Self Assessment tax return. If you’re self-employed and working from the UK for overseas clients, your euro payments will generally be treated as self-employment income rather than automatically being classed as foreign income.

Keep clear records of your euro payments, exchange rates and sterling equivalents throughout the year to make filing easier.

With Pie, you can keep your income information organised in one place and have everything ready when it’s time to file your Self Assessment.

How to Add Euro Income to the Pie Tax App

Adding income you’ve received in euros to the Pie Tax App is straightforward. First, convert your euro income into pounds sterling, then enter the details in the app. Here are the steps to follow:

Convert Your Euro Income to Pounds

Once you have calculated the sterling amount, open the Pie Tax App and go to Quick Add at the bottom of the navigation bar. Then click on Add Income.

Add Your Income Details

Enter the relevant information, including the income amount in pounds, and complete the details requested in the app.
Once you’ve added everything, click Finish. You can also attach the relevant invoice to keep your records organised.

Frequently Asked Questions

Do I need to declare income paid in euros?

Yes. If you’re a UK taxpayer and the euro payments are taxable income, you generally need to report them on your Self Assessment tax return. The fact that you’re paid in euros does not remove the need to declare the income.

Do I report my euro income in euros or pounds?

Self Assessment figures should be reported in pounds sterling. You’ll need to convert your euro income into pounds and keep a record of the exchange rate and calculation used.

If I’m self-employed, is euro income foreign income?

Not necessarily. If you’re a UK-based sole trader providing services from the UK to an overseas client, the income will generally be treated as self-employment income. Being paid by an overseas client or in euros does not automatically make it foreign income.

Do I need to complete an SA106 for euro payments?

Not automatically. If the euro payments are ordinary self-employment income, they will generally be reported through the self-employment section of your Self Assessment return. An SA106 may be relevant where you have genuine foreign income or are claiming Foreign Tax Credit Relief.

What records should I keep for euro payments?

Keep your invoices, payment dates, original euro amounts, exchange rates used and sterling equivalents, along with relevant bank statements. Good records can make it much easier to calculate and report your income accurately when you file your Self Assessment.