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HMRC internal manual

Stamp Taxes on Shares Manual

From
HM Revenue & Customs
Updated
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Depositary receipt and clearance services: scope of 1.5 per cent charge: Stamp Duty Reserve Tax - Dividend Re-Investment Plan - registered shares

A Dividend Re-Investment Plan (DRIP) is similar to an optional stock dividend, except that the shareholder typically makes an advance “standing order” with the company to take part or all of future dividend payments in the form of additional registered shares rather than cash. Where the shareholder elects to receive dividend payments in registered shares under a DRIP, the issuing company or its agent will use the cash dividend foregone to purchase shares on the secondary market which are then transferred and distributed to the shareholder.

The 1.5 per cent stamp implications arising on DRIPs are the same as those applying to Optional Stock Dividends. See STSM055130.