Trusts and pension schemes: pension schemes: Pension Fund Pooling Vehicles - Stamp Duty and Stamp Duty Reserve Tax treatment
The stamp duty and SDRT treatment of PFPV transactions is set out below:
- Cash contributions as subscriptions for units do not attract stamp duty/Stamp Duty Reserve Tax (SDRT) as there is no change of beneficial ownership because the manager/trustee holds the assets on trust for the single initial investor.
- Cash contributions do not attract stamp duty/SDRT. Although the cash contribution dilutes the first investor’s proportionate interest in existing underlying securities, there is no agreement for sale of an interest in chargeable securities, so no charge to SDRT.
- Contributions of assets are transfers on sale, but no charge to ad valorem stamp duty arises because they are not treated as stock under SI 1996/1584. A letter of direction may be used to frank the SDRT charge arising on the agreement to transfer chargeable securities.
Investors leaving the scheme
- If units are redeemed or cancelled for cash, there is no transfer on sale or agreement to transfer, hence no charge to stamp duty or SDRT respectively.
- If there is an in specie redemption, there is a transfer on sale but the consideration is not regarded as stock, so no ad valorem stamp duty is charged. A letter of direction will frank the SDRT charge arsing on the agreement to transfer chargeable securities.
Transfer of units between investors within the PFPV
- The units are not treated as chargeable securities for SDRT purposes so no charge under FA1986/S87 arises on the agreement to transfer the units.
- The units are not treated as stock or units in a unit trust scheme so are outside the scope of ad valorem stamp duty.
For further information please see the Savings and Investments Manual at SAIM6200 et seq.