Interaction between SDRT and stamp duty
Interaction between SDRT and stamp duty

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Interaction between SDRT and stamp duty
  • HMRC guidance—Stamp Taxes on Shares Manual
  • Securities exempt from all stamp duties are not chargeable securities
  • Primacy of SDRT over stamp duty
  • SDRT cancelled by duly stamped instrument of transfer
  • Duly stamped
  • Transfer from seller to buyer in accordance with the agreement
  • Exceptions where SDRT is not cancelled
  • Sub-sales
  • HMRC's concessionary cancellation of SDRT charge for shares in CREST

FORTHCOMING CHANGE on extending market value rule to transfers of unlisted securities to connected companies: Following a consultation on aligning the stamp duty and SDRT consideration rules that ran until 30 January 2019, Finance Bill 2019–20 extends, with effect from Royal Assent, the market value rule for stamp duty and SDRT purposes to transfers of unlisted securities to connected companies (ie where the transferor is (or is the nominee for a person that is) connected with the transferee company) but only where some or all of the consideration consists of the issue of shares. In its summary of responses to that consultation, HMRC confirms that, at this time, it will not be taking forward any of the other proposals made in the consultation. For more information, see News Analysis: Draft Finance Bill 2019–20—Tax analysis—Stamp taxes on securities—extension of market value rule to transfers of unlisted securities to connected companies and for more information on the original consultation, see News Analysis: Exploring the stamp taxes on shares consideration rules consultation.

The 0.5% principal charge to SDRT is a tax that arises on an agreement (whether oral or written) to transfer chargeable securities for consideration. Stamp duty, by comparison, is a duty on instruments of transfer (ie physical documents) relating to stock or marketable securities or interests in partnerships where the partnership assets