A company owns a substantial amount of US listed investments. In line with FRS102, the accounts should include the investments at the balance sheet date at fair value and use the dollar rate at the balance sheet date. My understanding was that the sale of shares would create a capital gain and therefore be taxable at the point of sale only; does this mean that any gains/loss on exchange rate movements are not taxable or subject to tax relief, and likewise with the movement in the fair value of shares?

Arthur Weller replies:
The sale of the shares will create a capital gain. The gain is simply the difference between the sterling value of the amount paid for the shares when they were bought (you will need to convert the dollars paid into sterling, using the exchange rate on the day of purchase) and the sterling value of the sale proceeds (again you will need to convert the dollars received into sterling, using the exchange rate on the day of sale).