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HMRC internal manual

Stamp Taxes on Shares Manual

Exemptions and reliefs: exemptions: Financial institutions in resolution: stamp duty - exceptions

When a failed institution is placed into resolution and a stabilisation power exercised under the Banking Act 2009 (‘the Act’), the provisions of section 85A Finance Act 1986 (FA86) provide an exemption from Stamp Duty on certain transfers of shares and property from the failed institution to the appointed resolution temporary holding entity, and on transfers of securities to former creditors where that transfer is effected by a paper written instrument or order. A similar exemption applies in respect of Stamp Duty Land Tax (SDLT) under section 66A Finance Act 2003 on certain transfers of land to the appointed resolution temporary holding entity.

The Stamp Duty exemption under section 85A (1) FA86 will not apply to transfers in the following circumstances:

  • A share transfer instrument or order which transfers the failed institution’s issued share capital, and/or a property transfer instrument which transfers the business of the failed institution (which includes stocks or marketable securities) direct to a third party purchaser following exercise of a private sector purchaser resolution stabilisation power under section 11 of the Act. Here Stamp Duty at the rate of 0.5% (paragraph 3, Schedule 13 to Finance Act 1999) or Stamp Duty Reserve Tax (SDRT) (section 87 FA86) will apply in the normal way.
  • If, under the resolution terms the institution’s issued share capital and/or its assets which include stocks or marketable securities are onward transferred from a resolution temporary holding entity or temporary public body to a third party purchaser, 0.5% Stamp Duty or SDRT will continue to apply.

In both situations, the 0.5% charge may be replaced by a 1.5% Stamp Duty or SDRT charge where the transfer of UK incorporated shares is to a depositary receipt issuer (or its nominee) or an operator of an overseas clearance service (or its nominee).

STSM021040 gives the meaning of stocks or marketable securities.

STSM050000 provides information on a depositary receipt issuer, clearance service and the 1.5% stamp taxes implications on transfers of securities.