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HMRC internal manual

Stamp Taxes on Shares Manual

From
HM Revenue & Customs
Updated
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Derivatives: options - stamp implications: issue or grant of an Option

Stamp Duty

A document under which an equity option is issued or granted is chargeable with Stamp Duty on the amount of the consideration paid for the grant or issue. (George Wimpey & Co Ltd v IRC [1975] 2 All ER 45).

But following FA03/S125 Stamp Duty now only applies to an instrument issuing or granting an option in or over ‘stock or marketable securities’. For the meaning of ‘stock or marketable securities’ - see STSM021040.

As transactions undertaken by members of a derivative investment exchange are normally verbal, a contract which confirms a verbal agreement is not regarded as a stampable document upon which stamp duty is payable.

Stamp Duty Reserve Tax (SDRT)

As the issue or granting of an equity option contract represents an agreement to vest rights, rather than an agreement to transfer existing rights, in an underlying equity or securities, there is no SDRT obligation for which a tax charge will otherwise arise under the provisions of FA86/S87.