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HMRC internal manual

Corporate Finance Manual

Foreign exchange: accounts drawn up in a foreign currency: capital gains

Calculation of capital gains in a foreign currency

Capital gains are calculated in sterling. The rules in CTA10/S6 to S9 do not apply to capital gains, as capital gains are not calculated in accordance with generally accepted accounting practice.

Gains or losses on capital gains assets are calculated by translating into sterling

  • the original cost of the asset using the spot exchange rate at the acquisition date,
  • any improvement expenditure, acquisition or disposal expenses, at appropriate spot rates, and
  • the disposal proceeds using the spot exchange rate at the date of disposal

The capital gain or loss is then calculated in the normal way using these sterling amounts. The sterling gain or loss is entered on the company return, and any loss carried forward is carried in the sterling amount.