Foreign currency: example
|Day 1||US$2.40 to £1X borrows US$100,000||(=£41,667)|
|Day 8||US$2.30 to £1X buys shares for US$100,000||(=£43,479)|
|Day 360||US$2.00 to £1X sells shares for US$100,000||(=£50,000)|
|Day 365||US$1.90 to £1 X repays loan US$100,000||(=£52,631)|
The chargeable gain on the disposal of shares is computed as follows -
|Day 360 Disposal proceeds (in sterling terms)||50,000|
|Day 8 Acquisition cost (in sterling terms)||43,479|
|Chargeable gain subject to indexation||6,521|
The chargeable gains in respect of foreign currency are computed as follows -
|(i)||Day 8||Disposal proceeds (in sterling terms)||43,479|
|Day 1||Acquisition cost (in sterling terms)||41,667|
|(ii)||Day 365||Disposal proceeds (in sterling terms)||52,631|
|Day 360||Acquisition cost (in sterling terms)||50,000|
No relief is due for the `loss’ in sterling terms on repaying the loan (repaid £52,631 - borrowed £41,667 = `loss’ £10,964).
NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17207+ and for taper relief see CG17895+.