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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty Reserve Tax (SDRT): interaction with stamp duty and exemptions

Where an agreement and instrument of transfer relating to the same transaction would otherwise be subject both to Stamp Duty Reserve Tax (SDRT) and Stamp Duty respectively, a double charge to tax is avoided under FA86/S92 provided the following conditions are met.

Where an instrument is executed in pursuance of the agreement:

  • within six years of the ‘relevant day’ (See STSM012040);
  • transferring to the purchaser or his nominee all the chargeable securities to which the agreement relates; and
  • is duly stamped in accordance with Stamp Duty legislation (or is not chargeable);
  • the SDRT charge is cancelled and any SDRT paid is repayable (if claimed within six years of the relevant day) (FA86/S92(1), (1A) & (1B))  , together with interest if the tax is £25 or more (Regulation 13 of the Stamp Duty Reserve Tax Regulations 1986) (SI 1986/1711).

There is no SDRT equivalent of sub-sale relief. If Person A agrees to sell securities to Person B who in turn agrees to sell them on to Person C before Person B’s purchase has completed, then there are potentially two charges to SDRT.

If the transfer from Person A to Person C is effected by an instrument of transfer which is duly stamped, this only cancels SDRT on the agreement for transfer to Person C. The initial agreement between Person A and Person B will still incur SDRT.

Special rules apply regarding the cancellation and repayment of SDRT payable on an ‘own-shares agreement’ (an agreement to transfer shares in a company to that company - FA86/S92 (1C and 1D)).