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HMRC internal manual

Capital Gains Manual

Qualifying corporate bonds: loan relationships: FA2002 Foreign exchange (FOREX)

CG 54150-55 contain guidance on the CG aspects of FOREX for companies for accounting periods beginning on or after 1 October 2002. For periods beginning before 1 October 2002 see CG44000.

Before FA 2002, the legislation for FOREX, in FA 1993, was separate from the loan relationships legislation in FA 1996. The FA 1993 legislation covered the computation of profits and losses from exchange differences arising from transactions in foreign currencies, and how they were taxed.

Following FA 2002, exchange gains and losses on loan relationships denominated in a foreign currency are included in the calculation of the overall profit or loss on the loan relationship. The FA 1996 loan relationships legislation has been amended to incorporate exchange gains and losses, and the separate FOREX legislation has been repealed. Detailed guidance on the FA2002 rules for FOREX is at CFM9000+.