CFM64015 – Corporate Finance Manual – HMRC Internal Manual


For the periods 1993 to 2004, UK GAAP rules for accounting for exchange differences were included in the Statement of Standard Accounting Practice (SSAP) 20. From 2005, some companies were required, and others could choose, to apply the international accounting standard (IAS) 21 or its equivalent UK GAAP FRS 23 for the recognition of foreign currency transactions.

For business accounting periods starting on or after January 1, 2015, major changes were made to UK GAAP and SSAP 20 could no longer be used.

In single entity accounts, most UK companies, other than micro-entities, will now normally apply FRS 102, “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, a new UK standard which has replaced all previous standards. Its approach is closely aligned with International Financial Reporting Standards (IFRS), although it is less detailed. The main alternatives to FRS 102, for UK companies, are (i) International Accounting Standards as adopted by the EU (mandatory for some companies), (ii) FRS 101, which is similar to IAS, but with a reduced information framework or (iii) in the case of micro-entities that meet the necessary conditions, the much simpler FRS 105 standard, “The financial reporting standard applicable to the micro-entity regime”.

The current position is that UK companies, with the possible exception of micro-entities applying FRS 101, will account for exchange differences in a manner substantially in accordance with IFRS IAS 21.

For more information on foreign currency translation accounting, see CFM64110.


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