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HMRC internal manual

Stamp Taxes on Shares Manual

Exemptions and reliefs: reliefs: circumstances in which intra-group transfer will not cancel an SDRT charge

Ordinarily, the execution and stamping (if required) of an instrument ‘adjudged not chargeable with any duty’, including relief under FA30/S42, cancels the Stamp Duty Reserve Tax (SDRT) charge on the underlying agreement to transfer the securities. However FA86/S88(1B), (4), (5) and (6) limit the provisions for the cancellation of SDRT.

FA86/S88(1B) prevents intermediaries being used to buy stock for group members free from stamp duty or SDRT. It provides that an instrument on which stamp duty is not chargeable by virtue of FA30/S42 (group relief) is to be disregarded for the purposes of section 92(1A) and (1B) (cancellation of SDRT) where the transferor acquired the securities stamp duty/SDRT free under the relief for intermediaries (or under regulations made under FA91/SS116 - 117.).

That is, where an intermediary acquires securities with the benefit of intermediary relief, if those securities are subsequently transferred to another group member and group relief claimed then the group relief will not remove the SDRT chargeable on the intra-group transfer. This prevents an intermediary acting as a front for group members, by leaving the SDRT charge on the intra-group transfer in place. The section only applies to those securities for which relief was claimed and which have been held for a period less than 2 years. Special identification rules apply where necessary.