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What recognition means for a stock exchange
Recognition under section 1005 Income Tax Act (ITA) 2007 is for tax purposes only and confers no other status on the exchange concerned. It does not constitute any form of recognition or approval for regulatory or other purposes nor does it provide any form of approval or recommendation of any of the investments which are listed or traded on that exchange.
The definition of a recognised stock exchange is given in section 1005(1) ITA. It includes any market of a recognised investment exchange designated as a recognised stock exchange by an order made by the Commissioner for HMRC and any market outside the UK designated in such an order, these stock exchanges are listed in table 1. In the case of the jurisdictions in table 2 the stock exchanges which meet recognised stock exchange status are those which are stock exchanges within the law relating to stock exchanges of that jurisdiction.
All recognised stock exchanges prior to 19 July 2007 were designated under section 841(b) Income and Corporation Tax Act 1988 (ICTA). Any stock exchanges designated under section 841(b) ICTA are treated as designated for the purposes of section 1005 ITA going forward.
Stock exchanges recognised by HMRC
The term is often used in the phrase ‘listed on a recognised stock exchange’ or in similar or related expressions. Follow the links below to find tables that include the markets which meet the HMRC definition of ‘listed’ as set out in paragraph 7 below. While HMRC tries to maintain an up to date list this is not always possible because markets frequently rename, re-structure or merge. It is possible that you may identify stock exchanges within the law of a named jurisdiction (table 2) which we have not yet identified, but which would meet recognised stock exchange status. Equally you may identify a market of a recognised stock exchange where we have not given an opinion as to whether it meets the HMRC definition of listed. If you meet either of these situations contact HMRC details.
Find HMRC contact points for Recognised Stock Exchanges.
The phrase ‘listed on a recognised stock exchange’ in respect of shares and securities is now defined at section 1005(3) ITA. This means shares and securities which:
- are admitted to trading on that exchange
- included in the official UK list maintained by the Financial Services Authority (in its capacity as the UK Listing Authority) or are officially listed in a qualifying country outside the UK in accordance with provisions corresponding to those generally applicable in EEA states
HMRC recognise that in certain cases markets use terms such as ‘listed’, ‘admitted to trading’, or ‘quoted’. Both Table 1 and Table 2 identify the markets which we consider would meet the HMRC definition of ‘listed’.
Where HMRC legislation uses the term ‘dealt in on a recognised stock exchange’ shares dealt in on the recognised stock exchanges named in Table 1 or Table 2 would meet ‘dealt in on a recognised stock exchange’ whether the shares meet the HMRC definition of ‘listed’ or not (unless the specific legislation further qualifies the term ‘dealt in on a recognised stock exchange).
However, note that while some securities (for example a depositary receipt) could meet the HMRC definition of ‘listed on a recognised stock exchange’ for the purposes of section 1005 ITA, certain HMRC tax treatments, such as Individual Savings Accounts (ISA’s), require that the underlying investment represented by the security must meet the HMRC definition of ‘listed on a recognised stock exchange’. It is therefore necessary to check the guidance or legislation for the particular tax treatment to check whether there are any additional requirements.
Section 48A(3) Finance Act (FA) 2005 requires ‘alternative finance investment bonds’ (Shari’a-compliant financial instruments commonly known as ‘sukuk’) to be listed on a recognised stock exchange. An alternative finance investment bond listed on an exchange recognised under section 1005 ITA will meet this requirement. In addition, certain other exchanges are designated only for the purposes of section 48A FA 2005. An alternative finance investment bond listed on such an exchange will meet the listing requirement in section 48A(3) FA 2005, but the exchange is not a recognised stock exchange for any other purpose. Designation has effect from 1 April 2007. See Table 3 below for a list of stock exchanges designated for the purposes of section 48A Finance Act 2005.