Foreign currency gains and losses

Produced by Tolley in association with Anne Fairpo

The following Corporation Tax guidance note Produced by Tolley in association with Anne Fairpo provides comprehensive and up to date tax information covering:

  • Foreign currency gains and losses
  • General rule
  • Disregarded exchange gains / losses
  • Unallowable items
  • Losses of a non-exempt branch
  • Exchange differences on shares in a subsidiary

Foreign currency gains and losses

A UK company doing business overseas is likely to have to deal with transactions in foreign currencies, leading to foreign exchange movements where the transaction is translated into a sterling equivalent in the accounts.

Foreign exchange gains and losses can arise where the accounts of a branch are consolidated with those of the UK company, where the branch accounts are prepared in a different currency and no election has been made to exempt the branch profits and losses from UK tax (see the Foreign branch exemption ― overview guidance note). For corporation tax purposes, the profits of a UK company, including those arising overseas or in a permanent establishment, must be computed and expressed in sterling.

Exchange gains and losses can also arise:

  1. at an accounting period end when there is a di

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