Taxes Consolidation Act 1997 section 753B

Application

Section 753B sets out when the stock borrowing and repurchase agreement rules in this Chapter apply, and the tax treatment that follows when they do.

• The Chapter applies to financial transactions entered into on or after 1 January 2020, with specific exclusions for equity lending across dividend dates and debt security lending across coupon dates where certain withholding tax conditions are met.
• Where the Chapter applies, the substance of the transaction (short-term lending) is recognised for tax purposes rather than its legal form (sale and repurchase of securities), so that the disposal and reacquisition of the securities are disregarded for CGT.
• Any fees, margins or other financial gains arising to either the stock seller or stock buyer under the transaction are treated as if they arose from the lending of money at interest, and are taxable in full as interest income.
• Manufactured payments (substitute dividends or interest paid by the stock buyer to the stock seller) are deductible for the stock buyer and taxable as dividends in the hands of the stock seller under section 753C.