Foreign Currency Assets and Chargeable Gains - Public consultation

The ATT invites comments on whether or not to introduce a rule requiring companies which do not use a sterling currency for accounting purposes to compute their chargeable gains and allowable losses in a currency other than sterling and if so, the potential scope of such a rule.

Please send any comments to atttechnical [at] with 'Foreign Currency Assets' in the title by 28 September 2012.


The Government is consulting to understand the impacts of different options for simplifying chargeable gains rules where tax and economic gains and losses are not aligned. In 2011, businesses, accountants and lawyers made representations relating to the rule that requires a company to compute its capital gains and losses in sterling. The breadth of the rule means that it applies even where that company’s currency for accounting purposes, its functional currency, is not sterling.

Where companies have a non-sterling currency for accounting purposes they must translate amounts into sterling for chargeable gains purposes. Therefore, chargeable gains and allowable losses can include amounts attributable to currency exchange movements against sterling even where there is no underlying economic gain or loss to the company.

Following consultations, businesses and representatives welcomed simplifications which were implemented in Finance Acts 2009 and 2011 on four areas of the chargeable gains rules:

  • Transfers of gains and losses within a group
  • Capital losses after a change in ownership
  • Value shifting and depreciatory transactions
  • De-grouping charges

The Government would like to establish whether there is scope for further simplification of the chargeable gains rules by considering whether or not companies with a non-sterling functional currency should continue to be required to compute their chargeable gains and allowable losses in sterling.

If a new rule is introduced, the Government proposes it should require companies with a non-sterling functional currency to compute chargeable gains and allowable losses on disposals of shares using that functional currency.

Technical Team

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