§ Lieut.-Colonel ARCHER-SHEEasked the Chancellor of the Exchequer whether, in the case of Income Tax payers who derive part of their income from foreign countries and also spend part of their 253W income in foreign countries, he can state how the correct amount received by them and spent in a foreign country is to be calculated in view of the fluctuating rate of exchange; and is it proposed to calculate these amounts on an annual or a monthly average rate of exchange, or whether each item of dividend and income received abroad has to be converted into sterling for the purpose of paying Income Tax at the rate of exchange of the day upon which such dividend or other item of income was credited to the account of the Income Tax payer in the bank of the country in which his income is collected?
Mr. YOUNGI understand that the general practice of the assessing authorities in computing liability to United Kingdom Income Tax under the Rules of Cases IV and V of Schedule D of the Income Tax Act, 1918, is to convert the income from foreign securities (assessable to United Kingdom Income Tax on the full amount of such income arising in the year of assessment) at the mean rate of exchange for the year of assessment. As regards income from foreign stocks, shares, or rents (which is assessable to United Kingdom Income Tax on the basis of the average income of the three preceding years), the income for any Income Tax year included in the average is converted at the mean rate of exchange for that year.