Income Tax Act 2007

Chapter 3 U.K. Tax credits: stock lending arrangements and repos

Stock lending arrangements U.K.

592 No tax credits for borrower under stock lending arrangement U.K.

(1) This section applies if—

(a) there is a stock lending arrangement in respect of UK shares, [F1 or overseas shares,]

(b) a qualifying distribution is made to the person who is the borrower under the arrangement,

(c) the qualifying distribution is, or is a payment representative of, a dividend in respect of the F2 ... shares, and

(d) a manufactured dividend [F3 or manufactured overseas dividend] representative of the dividend is paid by the borrower in respect of any UK shares [F4 or overseas shares] in respect of which the arrangement is made.

(2) The borrower is not entitled to a tax credit under section 397(1) [F5 or 397A(2)] of ITTOIA 2005 (tax credits for qualifying distributions) in respect of the distribution.

(3) If the borrower is UK resident, section 399(2) of ITTOIA 2005 (recipients of qualifying distributions treated as having paid income tax at dividend ordinary rate on them) does not apply in respect of the distribution.

Textual Amendments

F1 Words in s. 592(1)(a) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 27(2)(a)

F2 Word in s. 592(1)(c) omitted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 12 para. 27(2)(b)

F3 Words in s. 592(1)(d) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 27(2)(c)(i)

F4 Words in s. 592(1)(d) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 27(2)(c)(ii)

F5 Words in s. 592(2) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 27(3)

Repos U.K.

593 No tax credits for interim holder under repo U.K.

(1) This section applies if—

(a) there is a repo in respect of UK shares [F6 or overseas shares] ,

(b) under the repo, the original owner has transferred the F7 ... shares to the interim holder,

(c) a qualifying distribution is made to the interim holder,

(d) the qualifying distribution is, or is a payment representative of, a dividend in respect of the F8 ... shares, and

(e) a manufactured dividend [F9 or manufactured overseas dividend] representative of the dividend is paid by the interim holder in respect of any UK shares [F10 or overseas shares] in respect of which the repo is made.

(2) The interim holder is not entitled to a tax credit under section 397(1) [F11 or 397A(2)] of ITTOIA 2005 (tax credits for qualifying distributions) in respect of the distribution.

(3) If the interim holder is UK resident, section 399(2) of ITTOIA 2005 (recipients of qualifying distributions treated as having paid income tax at dividend ordinary rate on them) does not apply in respect of the distribution.

Textual Amendments

F6 Words in s. 593(1)(a) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 28(2)(a)

F7 Word in s. 593(1)(b) omitted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 12 para. 28(2)(b)

F8 Word in s. 593(1)(d) omitted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 12 para. 28(2)(b)

F9 Words in s. 593(1)(e) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 28(2)(c)(i)

F10 Words in s. 593(1)(e) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 28(2)(c)(ii)

F11 Words in s. 593(2) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 28(3)

594 No tax credits for original owner under repo U.K.

(1) This section applies if—

(a) there is a repo in respect of UK shares [F12 or overseas shares] ,

(b) under the repo, the original owner has transferred the F13 ... shares to the interim holder,

(c) a qualifying distribution is made,

(d) the qualifying distribution is a manufactured dividend [F14 or manufactured overseas dividend] paid under the repo in respect of the F15 ... shares by the interim holder to the original owner, and

(e) the repo is not such that the actual dividend which the manufactured dividend [F16 or manufactured overseas dividend] represents is receivable by a person other than the original owner.

(2) The original owner is not entitled to a tax credit under section 397(1) [F17 or 397A(2)] of ITTOIA 2005 (tax credits for qualifying distributions) in respect of the distribution.

(3) If the original owner is UK resident, section 399(2) of ITTOIA 2005 (recipients of qualifying distributions treated as having paid income tax at dividend ordinary rate on them) does not apply in respect of the distribution.

Textual Amendments

F12 Words in s. 594(1)(a) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 29(2)(a)

F13 Word in s. 594(1)(b) omitted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 12 para. 29(2)(b)

F14 Words in s. 594(1)(d) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 29(2)(c)(i)

F15 Word in s. 594(1)(d) omitted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 12 para. 29(2)(c)(ii)

F16 Words in s. 594(1)(e) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 29(2)(d)

F17 Words in s. 594(2) inserted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 29(3)

Interpretation U.K.

595 Meaning of “manufactured dividend” U.K.

In this Chapter “manufactured dividend” [F18 and “manufactured overseas dividend” have] the same meaning as in Chapter 2 (see [F19 sections 573(1)(a) and 581(1)(a)]).

Textual Amendments

F18 Words in s. 595 substituted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 30(2)

F19 Words in s. 595 substituted (21.7.2008 with effect in accordance with s. 34(2) of the amending Act) by Finance Act 2008 (c. 9), Sch. 12 para. 30(3)