Stamp duty and SDRT implications of a rights issue
Stamp duty and SDRT implications of a rights issue

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

  • Stamp duty and SDRT implications of a rights issue
  • What are nil paid rights?
  • No stamp duty or SDRT due on issue of nil paid rights (or PAL) or crediting of nil paid rights in CREST
  • SDRT (but no stamp duty) on transfer of nil paid rights
  • No stamp duty or SDRT due on the issue of the new shares
  • No stamp duty or SDRT on the lapse of rights
  • Stamp duty and SDRT implications of transfer of shares

This Practice Note explains the key stamp duty and stamp duty reserve tax (SDRT) implications of a rights issue; in particular, the stamp duty and/or SDRT consequences of the issue of nil paid rights, the transfer of those rights, the lapse of those rights and the issue of the new shares.

This Practice Note is drafted on the assumption that the securities being issued under the rights issue are shares.

However, this Practice Note is not relevant to unlisted shares that are admitted to trading on a recognised growth market such as AIM—this is because such shares are in any event exempt from stamp duty and SDRT. For more information on this exemption, which took effect on 28 April 2014, see Practice Note: Growth market exemption from stamp duty and SDRT.

Broadly, a rights issue is an offer of new shares at a discount to existing shareholders in respect of , and in proportion to, their existing shareholdings. For more information on what a rights issue is, see Practice Note: What is a rights issue? and HMRC's published practice in its Capital Gains Manual at CG50292.

For the tax considerations relevant to the issuer and for the capital gains tax considerations relevant to the shareholders in a rights issue, see Practice Notes:

  1. Key CGT implications for shareholders in a rights issue, and

  2. Key tax considerations