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Regulations have been made to provide for the exchange gains and losses which have been treated as matched (and so excluded from tax computations) to be brought into account for tax purposes in the accounting period in which the disposal of the matched asset takes place¹. Identification rules apply to determine the extent to which an asset is matched.

For accounting periods beginning on or after 1 January 2005, exchange movements arising on a currency contract are treated as matched with an asset where:

1. Ìý

   (a)ÌýÌýÌýÌý exchange movements on the currency contract and an asset have both been recognised in the company's statement of changes in equity or statement of recognised gains and losses in accordance with generally accepted accounting practice; or

2. Ìý

   (b)ÌýÌýÌýÌý where the currency contract is treated as matched with an asset under the Disregard Regulations² (see D1.864).

Where a currency contract is treated as matched against assets on a disposal of which a chargeable gain would arise, for a disposal that takes place on or after 6 April