HMRC internal manual

General Insurance Manual

GIM5120 - Taxation of the investment return: corporate and government debt: exchange differences: accounting periods ending after 31 March 1996 and beginning on or after 1 October 2002

For periods beginning on or after 1 October 2002, substantial changes were made to the loan relationships legislation. In particular, for these periods it covers exchange gains and losses on

  • loan relationships
  • money debts which are not loan relationships (for example trade balances such as unpaid claims and premiums)
  • foreign currency notes and coins
  • provisions, including technical reserves for unpaid claims (see GIM6120)
  • specified insurance balances - unearned premium provisions, unexpired risk provisions and deferred acquisition costs (FA96/S100 (10)(b) and FA96/S100 (11)(b) - see GIM6060)

Exchange gains and losses are brought into account in accordance with the accounts; for companies applying UK GAAP this includes the relevant provisions of the 2005 ABI SORP (paragraph 219) - see GIM2040+.