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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty on shares: Stamp Duty - basics of a charge: Transfers of listed securities and connected persons: How Stamp Duty is to be calculated

Finance Bill 2018-19 introduces legislation to provide for a new Stamp Duty (and Stamp Duty Reserve Tax (SDRT)) market value rule where listed securities are transferred to a company or its nominee (whether or not for consideration), and the person transferring the securities is connected with the company or is the nominee of a person connected with the company.

The market value rule does not apply to acquisitions of stocks or marketable securities by persons other than companies that are connected with the transferor, or to transfers of unlisted stocks or marketable securities.

Similarly, the market value only applies where listed stocks or marketable securities are transferred to a connected company where Stamp Duty company relief is not available.

0.5% Stamp Duty 

In a case where listed securities are transferred to a connected company (or its nominee) for consideration in money, other stocks or securities, or to which section 57 Stamp Act 1891 applies, a 0.5% charge to Stamp Duty under Paragraph 1, Schedule 13, Finance Act 1999 arises and is to be calculated by the amount or value of the consideration or, if higher, the market value of the listed securities at the date of the instrument.

Where no consideration is paid, the transfer of listed securities is to be treated as being for an amount of consideration in money that is equal to the value of the listed securities at the date of the instrument, and Stamp Duty is to be calculated by reference to the value of those listed securities.

1.5% Stamp Duty 

Where listed securities are transferred for consideration in money, other stocks or securities, or to which section 51 SA 1891 applies, from a person (or its nominee) to a connected company  and that company’s nominee is a depositary receipt issuer (or its nominee) or clearance service (or its nominee), if the amount or value of the consideration is less than the value of those securities at the time they are transferred, the transfer, for the purposes of a 1.5% Stamp Duty charge under section 67 or 70 Finance Act 1986 is to be calculated by reference to the market value of the listed securities at the time of transfer.

When does the legislation take effect?

The change came into effect from 29 October 2018 and applies to an instrument of transfer which was executed on or after 29 October 2018. Where a transaction is to be settled electronically without execution of a paper instrument, SDRT replaces the Stamp Duty charge and applies to an agreement to transfer ‘chargeable securities’ as defined in section 99 FA86 which was entered into on or after 29 October 2018, and for a 1.5% SDRT charge where the transfer is on or after 29 October 2018.

STSM031200 gives information on SDRT and transfers of listed securities and connected persons

STSM021320 explains the market value calculation

STSM021330 explains the meaning of listed securities

STSM021340 explains the meaning of connected company and connected persons