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HMRC internal manual

Stamp Taxes on Shares Manual

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HM Revenue & Customs
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Bearer instruments: rate and calculation of Stamp Duty on bearer instruments: rate and calculation of Stamp Duty on different types of bearer instrument

Bearer instruments are divided into four main classes. The appropriate rate of stamp duty is as follows:

  1. Issue of a Bearer Instrument

While a charge to bearer instrument stamp duty at the rate of 1.5 per cent can rise under FA99/SCH15/PARA1 on the issue of a United Kingdom (UK) bearer instrument, HM Revenue & Customs (HMRC) do not seek to collect the duty.

This follows HMRC’s acceptance of the decisions by the European Court of Justice (ECJ) in October 2009 in the case of HSBC Holdings PLC and Vidacos Nominees Ltd v Commissioners for HM Revenue & Customs (C569/07), and the First-Tier Tribunal [Tax Chamber] (FTT) in March 2012 in the case of HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs (TC/2009/16584), that the imposition of a 1.5 per cent stamp charge on the issue of UK company shares is incompatible with European Union law. Moreover, HMRC also accepts by extension, that these decisions also apply to prohibit the charging of 1.5 per cent ad valorem stamp duty such as that imposed by FA99/SCH15/PARA1.

  1. Transfer of stock by means of a bearer instrument

A stamp duty charge at the rate of 1.5 per cent can, however, arise whenever stock constituted by or transferable by means of a bearer instrument is transferred and:

    1. duty would be chargeable under FA99/SCH13/PART1 if the transfer were effected by an instrument other than a bearer instrument, or
      1. the stock constituted by or transferable by means of a bearer instrument consists of units under a unit trust scheme.

of £5 if not exactly divisible by £5.

  • Bearer Instrument By Usage

Where under 2. above, stock, in the form of a bearer instrument by usage which is constituted by or transferable by means of a bearer instrument is transferred, a charge to stamp duty at the rate of 0.2 per cent is payable on a bearer instrument by usage denominated in UK sterling currency. The duty is calculated by reference to the market value of the stock constituted by or transferable by means of the instrument (FA99/SCH15/PARA5), with the duty rounded up to the nearest higher multiple of £5 if not exactly divisible by £5.

  • Deposit Certificate for the stock of a single non-United Kingdom company

Where under 2. above stock, in the form of a deposit certificate which is constituted by or transferable by means of a bearer instrument is transferred, a charge to stamp duty at the rate of 0.2 per cent is payable on the deposit certificate denominated in UK sterling currency. The duty is calculated by reference to the market value of the stock constituted by or transferable by means of the instrument (FA99/SCH15/PARA5), with the duty rounded up to the nearest higher multiple of £5 if not exactly divisible by £5.

  • Substitute Bearer Instrument

While a substitute bearer instrument dated on or after 13 March 2008 is not chargeable to £5 fixed stamp duty under FA99/SCH15/PARA6 by virtue of Part 5 of FA08/S99/SCH32, nevertheless the substitute instrument must be impressed with the Bearer Instrument Denoting Stamp to indicate that the original bearer instrument was previously presented to HM Stamp Taxes.

For advice on what is a bearer instrument, see STSM061020

For information on what is a bearer instrument by usage, see STSM061040

For advice on stamping substitute bearer instruments, see STSM065040 and STSM065050