Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option
Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option

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

  • Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option
  • HMRC guidance—Stamp Taxes on Shares Manual
  • What is stabilisation?
  • Over-allocation
  • Settling the over-allocation or short position
  • The greenshoe option (or over-allotment option)
  • Stamp duty and SDRT implications of transactions undertaken to settle the over-allocation
  • No stamp tax on grant of greenshoe or over-allotment option
  • No stamp tax on transfers under stock loans
  • No stamp taxes on exercise of greenshoe option or on any market purchases of shares provided intermediaries relief applies
  • more

STOP PRESS relating to market value consideration for transfers of listed securities to connected companies: Finance Act 2019 introduced a targeted market value rule for stamp duty and SDRT for instruments transferring or agreements to transfer listed securities (ie stock or marketable securities or chargeable securities that are regularly traded on a regulated market, multilateral trading facility or recognised foreign exchange) to connected companies. For such transfers, the consideration chargeable to stamp duty or SDRT will be the higher of the consideration (if any) given for the transfer or the market value of the listed securities. This provision took effect retrospectively from 29 October 2018.

FORTHCOMING CHANGE on aligning the stamp duty and SDRT consideration rules: A consultation published on 7 November 2018 considers: (i) extending the market value rule to unlisted securities and to connected party transfers other than to companies, (ii) adopting the SDRT definition of ‘money or money’s worth’ for consideration for stamp duty purposes, and (iii) aligning the stamp duty and SDRT treatment of contingent, uncertain and unascertainable consideration, potentially adopting the SDLT approach to such consideration.

In the context of an offering of shares to the public by way of an initial public offering (IPO) or a secondary offering of shares, this Practice Note explains:

  1. what stabilisation is

  2. how an over-allocation of the shares offered in