With currency values uncertain, anyone investing abroad needs a cool head and
a strong constitution. It’s worth being aware of the UK’s chauvinistic tax rule, as well – all capital gains have to be worked out in sterling, using the exchange rates ruling on the day you bought the asset and on the day you sold it. That can make a big difference to your CGT position.

Suppose you bought a French ski chalet for €200,000 when the rate of exchange was €1.5 = £1. If you sell it for €210,000 when the exchange rate has moved to €1.15/£1, you appear to have made a gain of €10,000. But HMRC will treat this as a purchase for £133,333 and a sale for £182,608, and they will want tax on the £49,275 sterling gain. The French tax authorities will also ask for tax on the actual gain of €10,000, but at least that French tax should be available to offset against your CGT bill payable in the UK.

You need to be aware of the problem before you make a sale – you may be able to reduce the tax liability by making use of certain tax reliefs, or by timing the transactions to get a better result, as long as you know what’s coming.