STSM031160 - Scope of Stamp Duty Reserve Tax (SDRT): reliefs and exemptions

Examples where agreements to transfer are exempt from the principal 0.5% SDRT charge under section 87 FA1986, or a relief may be claimed, include:

  • securities, the transfer of which is exempt from all stamp duties, and rights and interests relating to such securities (section 99(5) and (5ZA) FA1986), for example exempt loan capital under section 79(4) FA1986, and government stocks (gilts)
  • securities which are not chargeable securities. This includes:
    •  section 99(4) FA1986– non-UK incorporated companies with no UK share register
    •  section 99(4B) FA1986 – securities admitted to trading on a recognised growth market
    •  section 99(5A) FA1986 – unit trusts schemes where the trustees of the scheme are resident outside of the UK
  • agreements to transfer chargeable securities which form part of an arrangement falling within section 93 or 96 FA1986 (section 90(4) FA1986)
  • agreements to transfer securities held within an unelected clearance service (section 90(5) FA1986)
  • interests in depositary receipts (section 99(6) FA1986)
  • transfers of securities between two unelected clearance services (section 97(1) FA1986)
  • transfers of securities between two depositary receipt systems (section 95(1) FA1986)
  • transfers of securities between an unelected clearance service and a depositary receipt system (or vice versa) (section 97B FA1986)

More information on exemptions applying to depositary receipt issuers and clearance services is at STSM057000.

  • transfers of securities to a depositary under an Authorised Contractual Scheme (ACS), in exchange for the issue of units in the scheme (and for no other consideration)
  • transfers between depositaries under the same ACS; and
  • agreements to transfer units in an ACS to a third party purchaser for consideration in money or money’s worth (section 90(7B) FA1986)
  • transfers of units under a unit trust scheme to or from the manager under the scheme (section 90(1) FA1986)
  • agreements to transfer shares and securities to charities and certain other institutions (section 90(7) FA1986)
  • purchases of chargeable securities by an intermediary (section 88A FA1986)
  • investment banks acting as principal in public issues (section 89A FA1986)
  • stock lending transactions. (section 89AA FA1986)

In addition, SDRT does not in practice arise on options or futures dealt in on ICE Futures Europe in the form of traded put or call options (as the writing or grant of such an option does not constitute a transfer).

Secondary trading of an equity option before its expiry can lead to a SDRT charge dependent on the terms of the option.

Additionally, the exercise of an option and transfer/delivery of the underlying UK registered shares will give rise to an SDRT charge (0.5%, or 1.5% if delivered to a depositary receipt issuer or clearance service (or their respective nominees)), if no written instrument is executed which is duly stamped (see STSM141030) for Stamp Duty purposes.