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HMRC internal manual

Stamp Taxes on Shares Manual

Derivatives: introduction to covered warrants: issue or grant of a covered Warrant

Stamp Duty

A document under which a covered warrant is issued or granted is chargeable with Stamp Duty on the amount of the consideration paid for the issue or grant. (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 a warrant over ‘stock or marketable securities’. For the meaning of ‘stock or marketable securities’ - see STSM021040.

Transactions undertaken by members of an investment exchange are, however, usually verbal and the covered warrant contracts confirming the verbal agreements are not regarded as stampable documents upon which stamp duty is payable.

Stamp Duty Reserve Tax (SDRT)

As the issue or granting of a covered warrant 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.