If you declare for tax in Spain and have income from a non Euro currency an important factor is what exchange rate to use. So far I have heard 3 versions being used by gestors for the pound:

1. 1 pound = 1.45 euros

2. Use exchange rate as at 31-12-07 around 1.36

3. Use exchange rate on the day declaracion -  so if done today around 1.25

On an income of say 10,000 pounds that could vary your Euro income by 2000 euros and so you could pay more than 480 euros more in tax at 24%

Has anybody heard any other methods actually being used?

That must be why my online banking has a little currency exchange feature for telling me the official rate on any given day…

I have been filing for 10 years with no objections from the hacienda - I have used the following practical approach
1. Income sent to spanish account will be in euros
2. Income not brought into Spain at the 31 december bank exchange rate

If anyone has a problem with obtaining exchange rates go to http://www.ecb.int/stats/exchange
This is the Eurpean banls site and you can get the history graphically, day by day numbers etc. etc. for all currencys against the euro

Well he used an exchange rate of 1:1.27 which suited me very well. But in the end I dont think he was bothered because the mortgage meant no tax payable.

You should exchange the rate of madrid forex.