Taxation (International and Other Provisions) Act 2010 section 418

The capital (fair value movement) adjustment

Section 418 explains how to calculate the capital (fair value movement) adjustment, which is used in the calculation of group-EBITDA under section 416.

• The capital (fair value movement) adjustment is the total of all relevant fair value movements arising from changes in the carrying value of relevant assets measured at fair value in the group's financial statements.
• A relevant fair value movement arises when a change in the fair value carrying amount of a relevant asset is reflected in the group's profit before tax.
• The adjustment adds back fair value losses (as a positive amount) and removes fair value gains (as a negative amount), effectively stripping capital fair value movements out of the EBITDA calculation.
• Changes in carrying value that are revenue in nature are excluded — only capital fair value movements are caught by this adjustment.