Stamp duty and SDRT and depositary interests in foreign shares
Stamp duty and SDRT and depositary interests in foreign shares

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

  • Stamp duty and SDRT and depositary interests in foreign shares
  • HMRC guidance—Stamp Taxes on Shares Manual
  • What is a depositary interest?
  • Stamp duty should not apply to transfers of CREST depositary interests (CDIs)
  • CDIs and SDRT
  • Conditions for SDRT relief for UK DIs in foreign securities
  • Definition of DI for the purposes of the relief
  • Definition of foreign security for the purposes of the relief
  • Underlying foreign security must be listed on a recognised stock exchange
  • Not all CDIs qualify for DI relief, but may still be exempt from SDRT
  • More...

This Practice Note explains:

  1. what depositary interests (DIs) are and why they are used

  2. why stamp duty is unlikely to apply to transfers of UK issued DIs

  3. the conditions that must be satisfied for relief from SDRT to apply to a transfer of DIs

  4. how the relief is obtained, and

  5. the notification obligations imposed when the SDRT relief applies

HMRC guidance—Stamp Taxes on Shares Manual

HMRC's guidance on stamp duty and SDRT is found in the Stamp Taxes on Shares Manual (STSM), which replaced the old Stamp Taxes Manual. Despite its name, the STSM contains guidance not just on shares, but also on other types of securities. The old Stamp Taxes Manual, which was last updated in 2001, is still available online as a PDF document (for which click here).

What is a depositary interest?

A depositary interest (DI) is a security issued by a depositary in country X, representing a security issued in country Y. Those issued outside the UK are often referred to as depositary receipts. The substantive security itself is normally held on behalf of the depositary, by a custodian in country Y. The holder of the DI enjoys all of the risks and rewards of ownership of the underlying security without the need to deal with registration or similar matters in country Y.

CREST is the UK settlement system for transfer and registration of uncertificated

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