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HMRC internal manual

Stamp Taxes on Shares Manual

Scope of Stamp Duty Reserve Tax (SDRT): Transfers of listed securities and connected persons: How Stamp Duty Reserve Tax (SDRT) is to be calculated

Finance Bill 2018-19 introduces legislation to provide for a new Stamp Duty and Stamp Duty Reserve Tax (SDRT) market value rule where listed securities are transferred to a company or its nominee (whether or not for consideration), and the person transferring the securities is connected with the company or is the nominee of a person connected with the company.

The market value rule does not apply to acquisitions of ‘chargeable securities’ as defined in section 99 Finance Act 1986 by persons other than companies that are connected with the transferor, or to unlisted ‘chargeable securities’ to companies which acquire securities from a connected person(s).

Similarly, the SDRT market value only applies where listed ‘chargeable securities’ are transferred to a connected company where Stamp Duty company relief is not available.

0.5% SDRT 

In a case where UK registered and listed securities are agreed to be transferred to a connected company (or its nominee) for consideration in money or money’s worth, an SDRT charge under section 87 FA86 at 0.5% arises and is to be calculated by the amount or value of the consideration or, if higher, the market value of the listed securities, at the date of the agreement. Where no consideration is paid, the agreement to transfer listed securities is to be treated as an amount of consideration in money that is equal to the value of the listed securities at the date of the agreement and SDRT is to be calculated by reference to the value of those listed securities.

 1.5% SDRT 

Where listed securities issued by a UK incorporated company are transferred for consideration in money or money’s worth from a person (or their nominee) to a connected company  and that company’s nominee is a depositary receipt issuer (or its nominee) or clearance service (or its nominee), if the amount or value of the consideration is less than the  value of those securities at the time they are transferred, the transfer, for the purposes of a 1.5% SDRT charge under section 93 or 96 FA86, is to be calculated by reference to the market value of the listed securities at the time of transfer.

When does the legislation take effect?

The change came into effect from 29 October 2018 and applies for the purposes of a 0.5% SDRT charge to an agreement to transfer ‘chargeable securities’ which was entered into on or after 29 October 2018, and for a SDRT charge at 1.5% where the transfer is on or after 29 October 2018. A similar change was made to Stamp Duty and applies to instruments executed on and after 29 October 2018.

STSM031220 gives information on how the market value is to be calculated

STSM031230 explains the meaning of listed securities

STSM031240 explains the meaning of connected company and connected persons

STSM031250 gives information on CREST reporting

STSM021305 gives information on Stamp Duty implications on transfers of listed stocks or marketable securities and connected persons

STSM031090 explains ‘chargeable securities’