Sukuk—investment bond arrangements and stamp duty and SDRT
Produced in partnership with Sarah Squires of Old Square Tax Chambers
Sukuk—investment bond arrangements and stamp duty and SDRT

The following Tax practice note produced in partnership with Sarah Squires of Old Square Tax Chambers provides comprehensive and up to date legal information covering:

  • Sukuk—investment bond arrangements and stamp duty and SDRT
  • Scope of, and assumptions made in, this note
  • HMRC guidance—Stamp Taxes on Shares Manual
  • No stamp duty or SDRT on transfer of registered AFIBs
  • Application of the loan capital exemption to transfers of registered AFIBs
  • No stamp duty or SDRT on issue of registered AFIBs
  • More complicated if sukuk are bearer instruments or do not qualify as AFIBs
  • Bearer sukuk
  • Sukuk that are not AFIBs
  • Table of stamp duty and SDRT consequences of registered sukuk that qualify as AFIBs

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

This Practice Note outlines the stamp duty and stamp duty reserve tax (SDRT) treatment of the issue and transfer of sukuk, a form of Shari’a-compliant financing, also known as Islamic financing, where the sukuk qualify as alternative finance investment bonds (AFIBs) for UK direct tax purposes. For more information on Islamic financing, including its underlying principles, see Practice Notes:

  1. Sources of Shari'ah, and

  2. Key principles of Islamic finance

Sukuk are certificates, similar to conventional bonds, that confer rights on the holders to receive payments from time to time (for more information, see Practice Notes: Sukuk—investment bond arrangements and their UK direct tax treatment—What are sukuk? and The structure and elements of a Sukuk transaction). This is why they are also referred to as Islamic bonds. Provided various conditions are satisfied, Islamic bonds (sukuk) may qualify as AFIBs for UK direct tax purposes.

Related documents:

Popular documents