Taxation of Chargeable Gains Act 1992 Schedule 7AC paragraph 13

Effect of stock lending arrangements

Section 13 deals with how stock lending arrangements are treated for the purposes of the substantial shareholdings exemption, ensuring that the lender continues to be regarded as the owner of lent shares throughout the lending period.

• Where shares are transferred under a stock lending arrangement and the disposal is disregarded for chargeable gains purposes, the lender is treated as continuing to hold the shares and retaining all rights attached to them throughout the lending period.
• The borrower is treated as not holding the lent shares and as not acquiring any rights attached to them during the arrangement.
• If the lender, or another group company, reacquires the lent shares (or shares representing them) before the arrangement ends, the look-through treatment ceases from that point for those shares.
• The lending period runs from the initial transfer to the borrower until the shares are returned, or until it becomes clear that the borrower will not return them.