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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Foreign exchange: matching: bringing amounts back into account: no gain/no loss disposals

Intra-group transfers and other no gain/no loss disposals

The EGLBAGL Regulations (SI 2002/1970) make special provision, in regulation 8, for no gain/no loss disposals. The most common such occurrence is a transfer between companies in the same capital gains group, to which TCGA92/S171 applies. The rule applies, however, to any of the provisions listed at TCGA92/S288(3A), although some of these are irrelevant to companies.

Under regulation 8, a no gain/no loss disposal of matched shares does not result in a ‘net gain’ or ‘net loss’ on liabilities or derivatives being brought back into account. Instead, amounts are brought back into account in the accounting period in which the ‘first relevant disposal’ of the asset occurs. The ‘first relevant disposal’ means the first disposal of the asset that is not a no gain/no loss disposal.

‘First relevant disposal’ occurs on or after 6 April 2010


  • there is a disposal of matched shares to an external party on or after 6 April 2010, and
  • the shares have previously been transferred between group companies at no gain/no loss, also on or after 6 April 2010,

the ‘net gain’ or ‘net loss’ that is brought into account, by adjusting the disposal consideration (CFM62290), will reflect exchange gains or losses on hedging instruments that have previously been disregarded by the transferor company, as well as amounts disregarded by the transferee. The effect of regulation 7(3) is that all of the group companies which have owned the asset are, in effect, treated as one company when computing the ‘net gain’ or ‘net loss’.

The amendments to regulation 7(3) and regulation 8 made by SI 2010/809 apply retrospectively, so the tax treatment will be the same even where the no gain/no loss disposal (or disposals) have occurred before 6 April 2010, unless the company makes an election under regulation 14 of SI 2010/809 (see CFM62340).

‘First relevant disposal’ occurs before 6 April 2010

Regulation 8 operated slightly differently before the EGLBAGL Regulations were amended by SI 2010/809, although the practical effect was the same.

The effect of a no gain/no loss transfer between group companies was to crystallise the ‘net gain’ or ‘net loss’ on hedging instruments, as a capital gain or allowable loss, at the time of the transfer. The gain or loss is not, however, brought into account until the first relevant disposal occurs, when it is aggregated with any gain or loss arising in the transferee company.

CFM62330 gives an example of how regulation 8 operates.