LONDON STOCK EXCHANGE

TAX AND SHARES

Owning shares should provide investors with capital gains and income. Both of these are subject to tax beyond a certain point. There are various types of taxes that investors should consider including:

• capital gains tax

• income tax

• stamp duty.

The information provided here is not intended to constitute legal or tax advice to any investor. Readers should consult their own legal or tax advisors as to their own particular tax consequences.

TAX EFFICIENT PRODUCTS

There are various ways of buying shares in a tax-efficient manner and the most popular of these are ISAs and pensions.

• ISAs

ISA stands for individual savings account and shares bought as part of an ISA are exempt from capital gains and income tax. ISAs are set up through stockbrokers, banks or on the internet. They can also be arranged through an independent financial adviser, the Post Office National Savings or even supermarkets. There are plenty to choose from and stockbrokers or financial advisers can help investors to choose the most appropriate ISA for their needs.

ISAs can also be used for cash savings and can also include bonds and collective funds, such as unit trusts, investment trusts and OEICs (See section five).

• Pensions

Pensions can offer substantial tax incentives. Pension investments cannot be touched until you are 50 (and this will go up to 55 in 2010) and, once you reach 75, they have to be turned into annuities. This is a way of turning the lump sum of pension money into annual income. It is paid for the rest of your life and it is liable to income tax.

• SIPPs

These are self-invested pension products and they tend to be used by the wealthier or more experienced investor. They are subject to the same tax rules as other pension schemes but they give investors the chance to play a greater part in choosing which assets they want to put into their pension. Most stockbrokers offer SIPP accounts.

• VCTs

VCT stands for Venture Capital Trust. VCTs are listed on the London Stock Exchange and they invest in a range of small, often early-stage companies whose shares may be quoted on AIM. VCTs provide these businesses with funds to help them grow and from time to time, they will sell out of certain businesses and invest in new ones.

VCTs are relatively high-risk investments because early-stage businesses tend to be less stable than larger, more mature companies. Tax rules on VCTs are complex however and exemptions depend on how much they invest and how long they invest for. For more information on VCTs please contact your financial advisor.

ADVICE

Taxation on shares can be complicated and the rules may change from year to year. Further advice should always be sought from experts, such as stockbrokers, accountants and HM Revenue and Customs

Rulebook

All London Stock Exchange member firms are bound by the Rules of the London Stock Exchange (“the rules”) and must ensure compliance with these rules. The rules were fully updated in 2007 in readiness for the introduction of the Markets in Financial Instruments Directive (“MiFID”or “the Directive”). The revised Rulebook also aligned the rules more closely with the structure of the trading system and simplified them where possible to make them more user-friendly.

The Rules are therefore closely linked to the operation of the trading system and should be read in conjunction with the Guide to the trading system and the parameters. Associated guidance and parameters are available from the downloads below.

A copy of the latest version of the Rulebook is available on the downloads below and is divided into the following sections:

Core Rules

The core rules apply, with some exceptions, to all member firms and include categories of membership, authorisation, general suitability and other general requirements such as notifications and trade records.

The core rules are divided into a number of sections including:

• Member firms;

• Member firm services;

• Compliance and enforcement;

• Charges and fees;

• General conduct; and

• Systems and trading.

The general conduct rules cover misleading acts, conduct and prohibited practices, share price manipulation, and system testing.

System and trading rules cover member firm system problems, regulatory suspensions, market situations, when issued dealing, and conditional trades.

ORDER BOOK TRADING RULES

The order book trading rules are aligned closely with the operation and system rules of the trading system. In general the order book trading rules are high level and reference the trading system and parameters where applicable.

They are designed to be resilient to system configuration changes at segment and sector level within the trading system.

The rules primarily cover how member firms access the trading system and the responsibilities

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