BIM45875 - Specific deductions: losses: foreign exchange gains and losses

Guidance for accounting for foreign currency transactions is provided in FRS 102 Section 30 Foreign Currency Translation.

Related standards under other frameworks are:

FRS 105 Section 25 Foreign Currency Translation

IAS: IAS 21 The Effects of Changes in Foreign Currency

Old UK GAAP: SSAP 20 Foreign Currency Translation

In each case the respective standards contain specific rules on accounting for foreign exchange gains and losses.

Companies

Exchange gains and losses that arise on the monetary assets or liabilities of companies are taxed or relieved under the loan relationship rules. See CFM60000 onwards.

Unincorporated businesses

The tax treatment will often follow the accounting treatment. It will not follow the accounting treatment if the underlying asset is a capital asset of the business, unless the Marine Midland approach is followed (see BIM39555 and BIM39560).

A full description of the treatment of foreign exchange gains and losses is in Statement of Practice SP 2/02 and BIM39500 onwards.