The UK tax treatment of repos has taken centre stage in recent years, following the revamp of the repo rules in 2007 and high-profile tax litigation involving repos in structured transactions. While the direct tax treatment of repos is now closely aligned with their accounting treatment, the tax treatment of stock lending has become an increasingly complex hybrid of accounts-based tax rules, statutory constructs and deeming fictions. Given the increasing importance of stock lending to financial institutions as a source of liquidity, this article provides a reminder of the key principles of stock lending taxation.
