Manufactured dividend meaning

In practice, a manufactured dividend is the dividend‑equivalent amount paid by a temporary holder of shares to the person who transferred them, so the transferor is put in the same position as if they had still received the dividend during a securities lending or sale and repurchase (repo) period. In the UK the term is defined in legislation: for UK shares, a “manufactured dividend” (Corporation Tax Act 2010, s 782); for overseas securities, a “manufactured overseas dividend” (CTA 2010, s 790). Key features are that the payment arises under a securities lending, repo or similar collateral arrangement involving transfer of legal title and later return of equivalent securities; it is a contractual payment, not a company law dividend. Tax treatment differs from actual dividends. For companies it is governed by CTA 2010 and related regulations; for individuals by the Income Tax Act 2007. The rules address withholding, deductibility and recipient taxation, and include anti‑avoidance provisions. Usage is consistent across England & Wales, Scotland and Northern Ireland. In Ireland the term is used in practice for securities lending and repo transactions, with taxation addressed under Irish tax legislation and Revenue guidance rather than the UK statutory definitions.