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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. Ìý

   •ÌýÌýÌýÌý shares in a company wherever resident,

2. Ìý

   •ÌýÌýÌýÌý loan stock or other securities of:

3. 1. Ìý

      –ÌýÌýÌýÌý the UK government

   2. Ìý

      –ÌýÌýÌýÌý a UK local authority

   3. Ìý

      –ÌýÌýÌýÌý another UK public authority

   4. Ìý

      –ÌýÌýÌýÌý a UK resident company or other body, or

4. Ìý

   •ÌýÌýÌýÌý shares, loan stock, stock or other securities issued by:

5. 1. Ìý

      –ÌýÌýÌýÌý a government, local authority or other public authority of a non-UK territory, or