Stock lending transactions take place when a person lends securities (stocks and shares) in circumstances which involve his parting with the legal interest in them, and is repaid in securities of the same type.

As a general principle, stock lending is governed by commercial accountancy principles. These ensure that, in computing trading profits, transfers under stock lending arrangements are ignored whatever the purpose of the loan, as in the parallel case of sale and repurchase arrangements (‘repo’) with which the tax treatment of stock lending is now broadly aligned.

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