Foreign exchange issues

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

Overview of foreign exchange provisions

Foreign exchange (FX) movements are generally taxed following the rules applicable to the underlying income, expenditure, asset or liability on which they arise, broadly as follows:

Capital assets	On a realisation basis (ie on disposal) following the rules applicable to the taxation of chargeable assets ― see the Calculation of corporate capital gains guidance note
Capital liabilities	Outside the scope of corporation tax
Monetary assets and liabilities	As income, on the basis on which they are recognised in the accounts, under the regimes governing loan relationships, relevant non-lending relationships, or derivative contracts in CTA 2009, ss 298–710 (Pt 5–7) ― see the What is a loan relationship?, Taxation of loan relationships and Derivative contracts guidance notes for more detailed background information regarding these regimes

The remainder of this guidance note focuses on FX movements arising on monetary assets and liabilities. Associated HMRC guidance notes can be found in CFM61000.

FX volatility can be costly to businesses if not managed appropriately. Whilst the default position for tax purposes is

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Trusts and Inheritance Tax

Gifts out of surplus income

Gifts out of surplus incomeA valuable exemption from inheritance tax (IHT) applies to gifts out of surplus income. This exemption applies only to lifetime gifts and is therefore a key part of lifetime planning. The exemption applies to both outright gifts and gifts into trust. Gifts which meet the

14 Jul 2020 11:48 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Personal Tax

Inter-spouse transfer

Inter-spouse transferIntroductionWhen a chargeable asset is transferred between two spouses or civil partners, there is a disposal by the transferor spouse / civil partner and an acquisition by the transferee spouse / civil partner for capital gains tax purposes. For simplicity, spouses and civil

14 Jul 2020 12:01 | Produced by Tolley Read more

Owner-Managed Businesses

Bad debts

Bad debtsBad debts usually arise where goods or services have been provided to a customer, for which payment has not been received within a reasonable or specified time period, or for which the customer is unable to pay. It is necessary to determine the quantum of relief that can be claimed for bad

14 Jul 2020 15:34 | Produced by Tolley Read more

UU��ֱ��