Part 4: Income tax, corporation tax and capital gains tax Section 34: Election of designated currency by UK resident investment company Background note
At Budget 2013, the government announced a review of the corporation tax rules in Parts 5 and 7 of Corporation Tax Act (CTA) 2009 which govern corporate debt (or ‘loan relationships’) and derivative contracts. There was consultation on a wide-ranging package of measures to update and simplify these regimes and to reduce their susceptibility to tax avoidance. The changes made by this section arise out of that review.
	The rules in Parts 5 and 7 include provisions for the treatment of exchange gains and losses arising from loan relationships, money debts and derivative contracts. However, these depend on rules in chapter 4 of Part 2 CTA 2010 for determining the currency in which a company’s profits are calculated for the purposes of corporation tax. These currency rules are therefore being updated alongside changes to Parts 5 and 7 of CTA 2009.