§ The Paymaster General (Dawn Primarolo)Legislation to block potential tax avoidance by individuals using transactions in UK equities is to be included in Finance Bill 2004. The changes will have immediate effect
The legislation closes a loophole resulting from a mismatch in the rules for taxing UK dividends and making "manufactured" payments under a sale and repurchase (repo) or stock lending arrangement. These schemes enable individuals to obtain an unintended tax windfall by using repos or stock loans to manufacture a dividend payment. The new provisions will apply to dividends received and manufactured dividends paid on or after today.
A copy of today's Inland Revenue news release giving the relevant background to this measure has been deposited in the Libraries of both Houses and is accessible on the Inland Revenue's website at http://www.inlandrevenue.gov.uk.