Income Tax Act 2007 section 653

Stock lending

Section 653 excludes stock lending transactions from the accrued income scheme, so that transfers of securities under stock lending arrangements are disregarded for accrued income purposes.

• Stock lending involves an institutional investor placing securities at a dealer's disposal, with the dealer undertaking to return equivalent securities later
• Although described as "lending", the securities do technically change ownership during the arrangement
• The accrued income scheme disregards these transfers because the lending institution retains the right to have equivalent securities returned and effectively keeps the interest entitlement
• The exclusion applies where the disposal and acquisition are already disregarded for capital gains tax purposes under section 263B(2) of TCGA 1992