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HMRC internal manual

Stamp Taxes on Shares Manual

From
HM Revenue & Customs
Updated
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Introduction to Stamp Duty on shares and Stamp Duty Reserve Tax (SDRT): SDRT rates: Stamp Duty Reserve Tax - higher rate for certain transactions

A rate of 1.5% is applied to the following under the provisions of FA86/S93:

  • issues of chargeable securities to a depositary receipt issuer (93(1)(a))
  • transfers of chargeable securities to a depositary receipt issuer 93(1)(b)

A rate of 1.5% is also applied, under the provisions of FA86/S96, to

  • issues of chargeable securities to a clearance service operator (96(2)(a))
  • transfers of chargeable securities to a clearance service operator 96(1)(b)

The higher rate charges are designed to operate as a ‘season ticket’ on account of future transfers within the depositary receipt system or clearance service which are exempt from the 0.5% principal charge.

While the provisions of FA86/S93 (4)(a) and FA86/S96 (2)(a) also extend a 1.5 per cent SDRT charge to an issue of chargeable securities in a company that is incorporated in the United Kingdom to a depositary receipt issuer or to an operator of a clearance service, following the decisions by the European Court of Justice (ECJ) in October 2009 in the case of HSBC Holdings PLC and Vidacos Nominees Ltd v Commissioners for HM Revenue & Customs (C569/07), and the First-Tier Tribunal (Tax Chamber) in March 2012 in the case of HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs (TC/2009/16584), HM Revenue & Customs (HMRC) accept that the charging of 1.5 per cent on share issues is incompatible with European Union law. In these circumstances, HMRC do not seek to collect 1.5 per cent on UK company share issues to a depositary receipt issuer or to a clearance service located anywhere in the world.

More detail about the above charges, and certain exceptions to those charges, can be found at STSM052020 and STSM051030.