CG78336 | Foreign currency: example
From HM Revenue & Customs · Capital Gains Manual
| Day | Amount | Total |
|---|---|---|
| Day 1 | US$2.40 to £1X borrows US$100,000 | (=£41,667) |
| Day 8 | US$2.30 to £1X buys shares for US$100,000 | (=£43,479) |
| Day 360 | US$2.00 to £1X sells shares for US$100,000 | (=£50,000) |
| Day 365 | US$1.90 to £1 X repays loan US$100,000 | (=£52,631) |
The chargeable gain on the disposal of shares is computed as follows -
| Disposal | £ |
|---|---|
| Day 360 Disposal proceeds (in sterling terms) | 50,000 |
| Day 8 Acquisition cost (in sterling terms) | 43,479 |
| Chargeable gain subject to indexation | 6,521 |
The chargeable gains in respect of foreign currency are computed as follows -
| - | Day | Aquisition cost/proceeds | Gain | £ |
|---|---|---|---|---|
| (i) | Day 8 | Disposal proceeds (in sterling terms) | - | 43,479 |
| - | Day 1 | Acquisition cost (in sterling terms) | - | 41,667 |
| - | - | - | Chargeable gain | 1,812 |
| (ii) | Day 365 | Disposal proceeds (in sterling terms) | - | 52,631 |
| Day 360 | Acquisition cost (in sterling terms) | - | 50,000 | |
| - | - | - | Chargeable gain | 2,631 |
No relief is due for the `loss' in sterling terms on repaying the loan (repaid £52,631 - borrowed £41,667 = `loss' £10,964).
NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. For indexation allowance see CG17200C and for taper relief see CG17895.