Stamp Duty, Stamp Duty Reserve Tax: transfers of listed securities and connected persons
Updated 7 November 2018
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This publication is available at https://www.gov.uk/government/publications/stamp-duty-stamp-duty-reserve-tax-transfers-of-listed-securities-and-connected-persons/stamp-duty-stamp-duty-reserve-tax-transfers-of-listed-securities-and-connected-persons
Who is likely to be affected
Companies that acquire listed securities from connected persons.
General description of the measure
The measure will introduce a new targeted market value rule where listed securities are transferred to a connected company where stamp taxes on shares group relief is not available.
The measure will apply where money is paid or there is nil consideration or where the consideration is other than money.
Policy objective
HMRC are aware of contrived arrangements involving the transfer of listed shares to connected companies to minimise stamp taxes on shares liability on the acquisition of high-value share portfolios.
This measure makes the tax system fairer by removing this unfair advantage.
Background to the measure
This measure was announced at Budget 2018.
Detailed proposal
Operative date
For the charge to Stamp Duty under paragraph 1 schedule 13 Finance Act 1999, the measure will have effect in relation to instruments executed on or after 29 October 2018.
For the charge to Stamp Duty Reserve Tax (SDRT) under section 87 Finance Act 1986, the measure will have effect for agreements to transfer made on or after 29 October 2018.
Where the agreement to transfer is conditional, the measure will have effect where the condition is satisfied on or after 29 October 2018.
Where the Stamp Duty or SDRT charge is under section 67, 70, 93 or 96 Finance Act 1986 in relation to transfers to depositary receipt issuers or clearance services the measure will have effect for transfers on or after 29 October 2018 (whenever the arrangement was made).
Current law
The current law in respect of consideration for Stamp Duty is included at:
- section 6 Stamp Act 1891
- schedule 13 Finance Act 1999
- section 90 Finance Act 1965
- sections 67 and 70 Finance Act 1986
The current law in respect of consideration for SDRT is included at sections 87, 93 and 96 Finance Act 1986.
Proposed revisions
Legislation will be introduced in Finance Bill 2018-19 to provide for a new market value rule where listed securities are transferred to a company (whether or not for consideration), and the person transferring the securities is connected with the company.
In these circumstances, the transfer will be chargeable to stamp taxes on shares based on the higher of the amount or value of the consideration (if any) for the transfer or the market value of the securities.
Summary of impacts
Exchequer impact (£m)
| 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 |
|---|---|---|---|---|---|
| negligible | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer and supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure is not expected to impact on individuals.
Equalities impacts
It is not anticipated that this measure will impact on groups sharing protected characteristics.
Impact on business including civil society organisations
The measure will only impact on a small number of businesses which undertake transactions where listed shares are transferred to connected companies.
The impact on business costs and administrative burdens is expected to be negligible.
One off costs include familiarisation with the new rules.
Ongoing costs will consist of calculating market value.
Operational impact (£m) (HMRC or other)
HMRC will not incur any costs implementing this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through regular communication.
Further advice
If you have any questions about this change, please contact Stephen Roberts on Telephone: 03000 585 455 or Simon English on Telephone: 03000 585 446.
You can also email stamptaxes.budgetfinancebill@hmrc.gsi.gov.uk.