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HMRC internal manual

Stamp Taxes on Shares Manual

Companies and shareholders: company’s purchase of own shares: Stamp Duty / Stamp Duty Reserve Tax implications

Under the provisions of the Companies Act, a company is obliged to make a return to the Registrar of Companies giving details of own shares purchased (CA06/S707). FA86/S66 provides that the return form is treated as an instrument of transfer of the shares for stamp duty purposes and is chargeable with stamp duty. The stamp duty charge does not however apply to any instrument of transfer by which the company’s own shares are transferred to the company (FA99/SCH13(1)(4)).

The charge to SDRT is cancelled, provided that the return has been made as above and to the extent that stamp duty has been paid on it (FA86/S92(1C)).

Where a 100 per cent subsidiary company purchases some of its own shares from its parent company, relief from the stamp duty charge may be available under the group relief provisions (FA30/S42) subject to certain conditions: see STSM042200 to STSM042320.

See STSM076000 for the stamp duty/ SDRT implications of a company’s purchase of own shares held on an overseas branch register.

See STSM075030 for the stamp duty/ SDRT implications of a subsequent transfer of own shares held in treasury.