CFM10532 - Currency transactions and accounting: computing capital gains in a non-sterling currency

Capital gains

This guidance describes the post-FA 2002 taxation of loan relationships, derivative contracts and FOREX.

The procedure described at CFM10526+ does not apply to capital gains and losses.

Although the assets may appear from year to year on the company's balance sheet in the currency of the accounts, it is necessary to translate the

• original cost of the asset using the exchange rate on the date of acquisition, and
• disposal proceeds using the exchange rate on the date of disposal.

The capital gain or loss is then calculated in the normal way using the sterling amounts.

The sterling gain or loss is entered on the company return, and any loss carried forward is carried in the sterling amount.