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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty Reserve Tax (SDRT): chargeable securities - stocks, shares and loan capital

Stocks, shares or loan capital: FA86/S99 (3)(a)

Chargeable securities include equities in UK companies in the form of stocks, shares and loan capital. In broad terms, most ‘plain vanilla’ loan capital is exempt from Stamp Duty (FA86/S78 & S79) and SDRT (FA86/S99(5) & (5ZA)).

Loan capital which is capable of being converted into shares or another form of convertible loan capital (FA86/S79(5)) at any time before the capital is to be repaid, or the loan capital carries a right to interest as outlined in FA86/S79(6), are regarded as a chargeable security for SDRT.

This is subject to the provisions of FA86/S79(7), (7A) & (7B) which prevent S79(6) from overriding the loan capital exemption.

Further information on the loan capital exemption is available at STSM041050, STSM041060 and STSM041070.  

An agreement to transfer chargeable securities must be an assignment of a pre-existing proprietary interest in those securities, so there is no charge on the issue of new stocks, shares or loan capital.

SDRT only arises when stocks and shares, and certain loan capital as outlined above are traded on the  on the secondary market.

See the glossary for the meaning of proprietary interest.