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HMRC internal manual

Stamp Taxes on Shares Manual

Introduction to Stamp Duty on shares and Stamp Duty Reserve Tax (SDRT): Stamp duty and SDRT basics: What is Stamp Duty Reserve Tax?

Because Stamp Duty (SD) is charged on instruments rather than transactions, transfers that do not require the execution of a written instrument are outside its scope. For this reason, Stamp Duty Reserve Tax (SDRT) was introduced to tax ‘paperless’ transactions in shares which otherwise escaped charge. The tax was introduced in October 1986, timed to coincide with the “Big Bang” changes to trading on the London Stock Exchange.

SDRT is a tax on agreements to transfer chargeable securities and applies regardless of whether there is an instrument of transfer. While the tax applies to chargeable securities, its application is worldwide, i.e. irrespective of the residence of the parties or where the agreement is made, and applies whether an agreement for sale is in writing or oral. But to avoid any double taxation the execution and stamping of an instrument with the appropriate SD discharges any SDRT liability. Further information on SDRT can be found at STSM030000.

Since 1986 the number of paperless transactions has increased. With the introduction of the electronic share settlement system (CREST) and the positioning of unit trust schemes within its scope, SDRT now accounts for the majority of revenue arising from share transactions.