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HMRC internal manual

Capital Gains Manual

Foreign currency: identification of disposals with acquisitions

TCGA92/S104

Foreign currency is subject to the same rules of identification and pooling as unquoted shares and securities. See CG50500+. This is because currency - banknotes, coins etc - are ‘securities’ for the purpose of section 104 as they are of a nature to be dealt with without identifying the particular assets disposed of or acquired, TCGA92/S104(3)(ii).

If the taxpayer agrees, you may adopt a simplified method for computing gains or losses on foreign currency acquired and disposed of in the course of buying and selling overseas investments. You may treat all disposals of any one currency, or `class’ of currency, in the year of assessment or accounting period as a single disposal. You should compute the gain or loss by reference to the average price of the pool from which the currency derived.