Commentary

C3.1806 Exempt gains—stock lending

Capital gains tax
Capital gains tax | Commentary

C3.1806 Exempt gains—stock lending

Capital gains tax | Commentary

C3.1806 Exempt gains—stock lending

Most stock lending arrangements are made to enable the borrower to meet an obligation to sell the securities if he has insufficient stock of his own to meet the delivery. He then hopes to make a profit by buying equivalent securities at a lower price to return to the lender when the loan matures.

Subject to certain conditions, disposals and acquisitions of securities under a stock lending arrangement are disregarded for capital gains tax purposes1. The transactions disregarded are limited to the initial transfer to the borrower and the final transfer back to the lender.

'Securities' for these purposes means2:

  1.  

    •     shares in a company wherever resident,

  2.  

    •     loan stock or other securities of:

    1.  

      –     the UK government

    2.  

      –     a UK local authority

    3.  

      –     another UK public authority

    4.  

      –     a UK resident company or other body, or

  3.  

    •     shares, loan stock, stock or other securities

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