Foreign exchange (forex) gains and losses which arise on trading transactions are subject to tax as part of the normal trading results of a company. However, forex gains and losses on loan balances, either borrowings, or loans made to other group companies, are also taxable based on the amounts which are recognised in the accounts. This applies whether the forex gains or losses are realised or unrealised and many groups have been caught out by this treatment, particularly in recent times as a result of volatility in the currency markets. This article examines some of the problems which can arise for tax, particularly as a result of the way forex gains and losses are accounted for under both UK GAAP and IFRS, and explores some of the options available for managing this risk.