# The Income Tax (Stock Lending) Regulations 1989, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations provide for the application of section 129 of the Income and Corporation Taxes Act 1988 (“the principal section”) to transfers made after 17th August 1989 in pursuance of stock lending arrangements. They also specify the conditions which must be fulfilled before the reliefs from income tax and capital gains tax conferred by the principal section and section 149B(9) of the Capital Gains Tax Act 1979 (“section 149B(9)”) (and, by virtue of section 727(2) of the 1988 Act, from the charge on accrued interest) can apply to such transfers.
Stock lending enables market makers in various types of securities to “borrow” securities from institutional investors in order to be able to make delivery under contracts of sale which they have entered into. The market maker undertakes to replace the “borrowed” stock at a later date with securities of the same kind. Although termed “stock lending”, the arrangement involves transfers of ownership which would give rise to income tax and capital gains tax charges apart from the reliefs given by those sections.
Regulation 1 provides for citation and commencement and regulation 2 for interpretation.
Regulation 3 provides for the application of the principal section to transfers made after 17th August 1989.
Regulation 4 provides that the reliefs conferred by the principal section and section 149B(9) are not to apply to transfers in pursuance of stock lending arrangements unless the conditions specified in the Regulations are fulfilled.
Regulation 5 specifies the conditions attaching to relief for transfers in pursuance of stock lending arrangements in gilt-edged securities.
Regulation 6 specifies the conditions attaching to relief for transfers in pursuance of stock lending arrangements in United Kingdom securities other than gilt-edged securities and quoted Eurobonds held in a recognised clearing system.
Regulation 7 specifies the conditions attaching to relief for transfers in pursuance of stock lending arrangements in overseas securities.

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Source: https://www.legislation.gov.uk/uksi/1989/1299/note (the official version)
Page: https://openlegislation.uk/income-tax-stock-lending-regulations-1989/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.