TCGA92/S263B provides that acquisitions and disposals of
securities under a stock lending arrangement are normally to be
disregarded for the purposes of Capital Gains tax. The transactions
disregarded are limited to the initial transfer to the borrower and
the final transfer back to the lender.
Stock lending arrangements are defined in TCGA92/S263B as
arrangements between two persons (the borrower and the lender)
whereby the lender transfers securities to the borrower and the
borrower is required to transfer those securities back to the
lender. Both transfers must be other than by way of sale.
‘Securities' includes UK shares, UK debt securities and
overseas securities (both shares and debt). For companies, debt
securities are within the loan relationships legislation and are
outside the capital gains charge. Paragraph 15 of Schedule 9 FA96
applies in relations to such transfers -
CFM17265.
An arrangement that includes the ability to transfer back
equivalent securities is also included provided that the securities
returned are in the same quantities, have the same rights attached
to them and are of the same type and nominal amount as the
originals.
Quasi-stock lending arrangements may be used in tax avoidance
to circumvent the TCGA92/S236B definition of a commercial stock
lending arrangement. See (
CFM17115) for further details and the
anti-avoidance provisions.
