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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty Reserve Tax (SDRT): the principal charge

Where a person (A) agrees with another person (B) to transfer chargeable securities (whether or not to person (B)) for consideration in money or money’s worth, a charge to Stamp Duty Reserve Tax (SDRT) arises on the ‘relevant day’ (FA86/S87(1) & (2)).

The relevant day means (FA86/S87(3)):

  1. In a case where the agreement is conditional, the day on which the condition, or in a case with several conditions, the day on which the final condition is satisfied, and
  2. In any other case the day on which the agreement is made.

The charge to SDRT applies regardless of whether or not the agreement to transfer is subsequently settled.

Person (B) is liable for SDRT (FA86/S91). This will still be the case where, pursuant to the agreement, settlement occurs and transfer of the chargeable securities is to, say, person (C).

While FA86/S91 defines the liable person, the provisions of Regulation 2 of the Stamp Duty Reserve Tax Regulations 1986 (SI 1986/1711) define an ‘accountable person’ as being responsible for giving notice of the agreement to transfer and payment of any relevant SDRT due to HMRC (Regulation 4 of the 1986 Regulations).

Where SDRT at the rate of 0.5% is due, calculation of the tax is by reference to the amount or value of the consideration paid in money or money’s worth. The value of any consideration not consisting of money shall be taken to be the price it might reasonably be expected to fetch on a sale in the open market at the time of the agreement to transfer (FA86/S87(6) & (7)).

While an agreement to transfer and a transfer on sale of securities can give rise to SDRT and Stamp Duty charges, the SDRT charge and any SDRT paid on an agreement to transfer can be cancelled and refunded under FA86/S92, if an instrument of transfer or other document used to effect settlement of that agreement is executed upon which Stamp Duty is paid and impressed thereon, or is not chargeable with Stamp Duty.

STSM031090 gives more information on ‘chargeable securities’

See STSM031040 for more information on an ‘agreement to transfer’

See STSM031060 for more information on ‘money or money’s worth’

See STSM016010 for more information on the liable person

See STSM016020 for more information on the accountable person’