HMRC internal manual

Stamp Taxes on Shares Manual

STSM042050 - Exemptions and reliefs: reliefs: Intermediary Relief (FA 1986 sections 80A & 88A) - general

Relief from Stamp Duty and Stamp Duty Reserve Tax (SDRT) is available to persons (including market maker principal brokers) who provide liquidity in the financial markets by being available to buy securities from individuals and other professional corporate bodies. Because they are obliged to deal when requested to do so, Stamp Duty and SDRT relief is available on all their share purchases.

Such persons are described by the legislation as ‘intermediaries’. The relief extends to options intermediaries, i.e. persons who provide liquidity by dealing in options.

The legislation is at FA86/S80A (Stamp Duty) and FA86/S88A (SDRT). Section 80A provides that no Stamp Duty is payable on an instrument which transfers stock to an intermediary; section 88A provides that no SDRT is chargeable on an agreement to transfer securities to an intermediary.

A number of conditions must be fulfilled to qualify as an intermediary. A person:

  • must be a member of one of a regulated market, or a multilateral trading facility (MTF) or a recognised foreign exchange;
  • must carry on a bone fide business of dealing in equities/options; and
  • must not carry on an excluded business.

Since 1 November 2007 it has also been possible for a person who is not a member of a regulated market, MTF or recognised foreign exchange but nevertheless is authorised under the law of an EEA state or Gibraltar, or has permission under the Financial Services and Markets Act 2000 to carry on any of the investment services or activities in paragraph 2 or 3 of Part 3 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to execute orders on behalf of clients or deal on own account, to apply for intermediary status by making an application direct to HMRC.

For details on how to apply to be an HMRC recognised intermediary see STSM042075.

See STSM022230 for the meaning of regulated market, multilateral trading facility, recognised foreign exchange and recognised foreign options exchange.