Scope of Stamp Duty Reserve Tax (SDRT): calculation of the tax
Agreements to transfer chargeable securities are charged to Stamp Duty Reserve Tax (SDRT) at 0.5% of the amount or value of the consideration paid in money or money’s worth (FA86/S87(6)).
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 the agreement is made (FA86/S87(7)).
Where chargeable securities are transferred (on sale or otherwise than on sale) to a depositary receipt issuer (or its nominee) or operator of a clearance service (or its nominee) the 0.5% charge is replaced by a higher one-off charge at 1.5%.
Where such securities are transferred for consideration in money or money’s worth i.e. a sale, the 1.5% SDRT is to be calculated by reference to:
- the amount or value of the consideration, or
- where the transfer is pursuant to the exercise of an option to buy or sell the securities, the amount or value of the consideration or the value of those securities, whichever is higher.
In any other case which includes a transfer otherwise than on sale, the 1.5% SDRT calculation is by reference to the value of the securities at the date of transfer.
Once any 1.5% SDRT obligation is satisfied and accounted for, subsequent transfers of interests in depositary receipts representing stocks or shares, and transfers of interests in UK incorporated stocks and shares already held by and within a clearance service are not subject to further SDRT (or Stamp Duty) charges at either 0.5% or 1.5% by virtue of FA86/S90(4) & (5) and FA86/S99(6).
The 1.5% charge applies to transactions in UK shares but not in foreign shares (even if they are on a UK register or ‘paired’ with UK shares) - see FA86/S99 (10).
SDRT uses the same rates as ad valorem Stamp Duty, but the rounding provisions are different. The SDRT charge is rounded to the nearest penny if necessary, taking any 0.5 pence as nearest to the next whole penny above (FA86/S99(13)).
For further information on Depositary Receipt issuers and Clearance Services see STSM050000
For further information on when the 1.5% charge may not be sought by HMRC see STSM053010