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From 1 April 2022, the profits and losses arising from derivatives which hedge the foreign currency risk on a forecast transaction or firm commitment relating to an anticipated future acquisition or disposal of shares will be disregarded throughout the lifetime of the hedging instrument while there is a relevant hedging relationship¹.

This relieving provision applies where a company enters into a derivative contract (on or after 1 April 2022) to hedge the exchange exposure on a forecast transaction or firm commitment that relates to the anticipated future acquisition or disposal of a substantial shareholding (see Division D1.10) or a qualifying holding of a QAHC (see Division D7.1)². This provision covers the hedging of³:

1. Ìý

   •ÌýÌýÌýÌý the anticipated acquisition cost, together with any incidental costs

2. Ìý

   •ÌýÌýÌýÌý the disposal proceeds, and any relevant dividend in relation to the relevant shareholding

3. Ìý

   •ÌýÌýÌýÌý the subscription of shares in, or entering into a creditor relationship with, another company (the acquiring company)