Q&As

If a company buys back shares from two shareholders where the consideration for each is under £1,000, but for both together is more than £1,000, are they treated as two buybacks so each can fall within the 'under £1,000' stamp duty exemption, or are they treated in aggregate?

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Produced in partnership with Kate Habershon of Morgan Lewis
Published on LexisPSL on 26/05/2020

The following Tax Q&A produced in partnership with Kate Habershon of Morgan Lewis provides comprehensive and up to date legal information covering:

  • If a company buys back shares from two shareholders where the consideration for each is under £1,000, but for both together is more than £1,000, are they treated as two buybacks so each can fall within the 'under £1,000' stamp duty exemption, or are they treated in aggregate?

We have assumed that:

  1. the company is incorporated in the UK

  2. the shares are being bought back by the issuer (rather than redeemed)

  3. there has been no artificiality introduced to ensure each transfer is for less than £1,000, and

  4. the shares are to be cancelled and not bought back to treasury

Stamp duty is prima facie chargeable on transfers for consideration of shares in a company incorporated in the UK (and in some cases with respect to other securities and/or non-UK companies). Stamp duty applies to a buyback of shares by an English company, on the basis that the shares are acquired by the company before being cancelled.

As explained in Practice Note: Tax consequences of share buybacks, on a company share buyback, the instrument th

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