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HMRC internal manual

Stamp Taxes on Shares Manual

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HM Revenue & Customs
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Exemptions and reliefs: reliefs: public issues - exceptions

FA86/S89A provides relief for certain public offers (see STSM071080 and STSM042020) where the shares are to be admitted to the Official List of the Stock Exchange, to enable issuing houses to act as principals without incurring the additional Stamp Duty Reserve Tax (SDRT) charges.

Sub-section (1) relieves purchases of securities (other than unit trust units) by issuing houses and sub-section (2) relieves the subsequent sale by them of newly subscribed securities where:

  1. the securities are bought by the issuing house and sold on under the same arrangements to the public;
  2. the sale is subject to an official listing on the Stock Exchange; and
  3. the securities are bought and sold on at the same price.

The meaning of ‘offer to the public’ is that founded in case law - i.e. an invitation to the public in general, and not restricted to a limited class. A placing of shares to (say) 75 financial institutions is prima facie not an issue to the public at large in the ordinary sense. It may still be possible, however, for such an offer to fall within the definition of ‘offer to the public’ by considering whether or not the offer is calculated to result, directly or indirectly, in the shares becoming available for subscription or purchase by persons other than those receiving the offer or invitation.

Subsection (3) provides relief for sales of registered shares to the public (or place) where the sale is effected by the issue of renounceable letters of acceptance (or similar documents) and the sale is conditional upon an Official Listing on the Stock Exchange. The SDRT charges on the subsequent renunciations remain in place as does the stamp duty charge on the eventual transfer document.