Corporation Tax Act 2009 section 328

Exchange gains and losses

Section 328 establishes how exchange gains and losses arising from a company's loan relationships are treated for corporation tax purposes, including key exceptions and the Treasury's regulation-making powers.

• Exchange gains and losses from loan relationships and related transactions are included within the loan relationships tax regime as taxable credits or allowable debits.
• An exception applies where the exchange gain or loss arises from translating a business's financial results from its functional currency into another currency and has been recognised in other comprehensive income rather than profit or loss.
• Investment companies are not taxed on exchange gains or losses that arise solely because the company changed its functional currency compared with the previous 12 months, unless the company has elected a designated currency under section 9A of CTA 2010.
• The Treasury has broad regulation-making powers to exclude or include specific types of exchange gains or losses, specify how they are calculated, and determine whether they are brought into account under the loan relationships rules or for chargeable gains purposes.