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HMRC internal manual

Stamp Taxes on Shares Manual

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HM Revenue & Customs
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Depositary receipt and clearance services: scope of 1.5 per cent charge: 1.5 per cent Stamp Duty charge - rights represented by an allotment letter or renounceable letter of allotment

A rights issue usually involves a corporate body provisionally allotting and offering new shares to its existing shareholders, in proportion to their existing holding. The offer gives a shareholder a right but not an obligation to subscribe for additional shares.

The issue of a provisional allotment letter or renounceable letter of allotment does not constitute a transfer of ‘stock or marketable securities’ (within the meaning of SA1891/S122) for the purposes of a 1.5 per cent or 0.5 per cent stamp duty charge.

A transfer on sale of rights under an allotment letter or renounceable letter of allotment, where the rights are renounceable no later than 6 months after the issue of the letter, is not chargeable with any stamp duty by virtue of FA99/SCH13/PARA24 (d).

See STSM055030 for the meaning of an allotment letter and renounceable letter of allotment.