Relief from stamp duty (but not SDRT) for dematerialisation of securities
Produced in partnership with Kevin Griffin
Relief from stamp duty (but not SDRT) for dematerialisation of securities

The following Tax practice note produced in partnership with Kevin Griffin provides comprehensive and up to date legal information covering:

  • Relief from stamp duty (but not SDRT) for dematerialisation of securities
  • HMRC guidance—Stamp Taxes on Shares Manual
  • Statutory basis for holding securities in dematerialised form
  • Occasions of conversion of securities from certificated to dematerialised form
  • Circumstances in which stamp duty and SDRT may arise
  • Conditions to qualify for relief
  • Relief from stamp duty is automatic
  • The future is dematerialisation

Most publicly traded UK securities are held in the electronic system, CREST. CREST is operated by Euroclear UK & Ireland (Euroclear). Holding securities in CREST allows transfers to take place rapidly and easily without the need to create paper transfer documents or share certificates. These securities are referred to as ‘dematerialised’ or ‘uncertificated’. Securities that are still held in paper form are known as ‘certificated shares’, and can include shares in certain unquoted companies and even in certain quoted companies where the shareholder chooses to hold them in this way.

Securities held in certificated form can be transferred into the CREST system. This involves creating a transfer document, which is potentially subject to stamp duty. In relation to liability to stamp duty, see: What does stamp duty apply to?

Relief from stamp duty for dematerialisation of securities automatically removes any such charge to stamp duty, provided appropriate conditions are met. In contrast to other stamp duty reliefs, there is no requirement to submit the transfer document to the stamp office for adjudication.

This practice note explains:

  1. why securities may be held in dematerialised form

  2. the circumstances in which stamp duty and SDRT may arise on dematerialisation of securities

  3. the conditions that must be satisfied to qualify for relief from stamp duty on dematerialisation of securities

  4. that the relief only applies to stamp duty, not to SDRT, and

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