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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Specific deductions: losses: foreign exchange gains and losses

Entities will account for foreign currency using one of the following standards: SSAP 20, FRS 23, FRS 102 section 20 or FRS 101. In each case the respective standards contain specific rules on accounting for foreign exchange gains and losses.

Companies

Exchange gains and losses that arise on the monetary assets or liabilities of companies are taxed or relieved under the loan relationship rules. See CFM60000 onwards.

Unincorporated businesses

The tax treatment will often follow the accounting treatment. It will not follow the accounting treatment if the underlying asset is a capital asset of the business, unless the Marine Midland approach is followed (see BIM39555 and BIM39560).

A full description of the treatment of foreign exchange gains and losses is in Statement of Practice SP 2/02 and BIM39500 onwards.