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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty Reserve Tax (SDRT): agreement to transfer

A charge to Stamp Duty Reserve Tax (SDRT) under FA86/S87 arises 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.’

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 applies equally to written and oral agreements.

Under FA86/S86 (4), SDRT is chargeable regardless of whether the agreement is made or effected in the UK and whether any party to the agreement is located or resident in the UK.

An agreement between A and B to transfer chargeable securities creates a charge to SDRT even if the transfer is to a third party (C). It is the agreement itself that creates the charge. Under FA86/S91, B is liable for the tax, even if the transfer is to C.

In order for an agreement to transfer chargeable securities to incur a SDRT liability, there must be an assignment of a pre-existing proprietary interest in those securities.

This does not cover, for example:

  • the issuance of new securities, such as on subscription or a bonus issue.
  • A rights issue does not in itself involve a transfer of securities, but an agreement to transfer rights to allotments of, or to subscribe for stocks shares and loan capital is regarded as a chargeable security for SDRT purposes.

The following will also not incur an SDRT liability:

 

  • The grant or creation of new rights,
  • The granting of an option over a chargeable security where no pre-existing proprietary  interest exists.  
  • However an agreement to transfer those rights or a transfer of rights to an existing option covering underlying chargeable securities may fall within charging scope of SDRT.

See STSM031050 for more information on conditional agreements

See STSM031090 for the meaning of chargeable securities.

See the glossary for the meaning of proprietary interest.