STSM082100 - Trusts and pension schemes: pension schemes: Pension Funds Pooling Schemes - Stamp Duty and Stamp Duty Reserve Tax treatment

The Stamp Duty and Stamp Duty Reserve Tax (SDRT) treatment of pension funds pooling schemes (PFPS) transactions is set out below:

First investor
  • Cash contributions as subscriptions for units do not attract a Stamp Duty or SDRT charge as there is no change of beneficial ownership because the manager/trustee holds the assets on trust for the single initial investor.
Subsequent investors
  • Cash contributions do not attract a Stamp Duty or SDRT charge. Although the cash contribution dilutes the first investor바카라 사이트™s proportionate interest in existing underlying securities, there is no agreement to transfer an interest in chargeable securities, so no charge to SDRT.
  • No charge to Stamp Duty arises on contributions of assets to a PFPS because units issued in return are not treated as stock under the Stamp Duty and Stamp Duty Reserve Tax (Pension Funds Pooling Schemes) Regulations 1996 (SI 1996/1584). A letter of direction may be used to frank the SDRT charge arising on the agreement to transfer chargeable securities to a PFPS.
Investors leaving the PFPS
  • If units in a PFPS are redeemed or cancelled for cash, there is no transfer on sale or agreement to transfer, hence no charge to Stamp Duty or SDRT respectively arises.
  • If there is an in specie redemption, there is a transfer on sale but as the consideration is not regarded as stock, no Stamp Duty charge arises. A letter of direction will frank the SDRT charge arsing on the agreement to transfer chargeable securities to the investor.
Transfer of units between investors within the PFPS
  • The PFPS units are not treated as chargeable securities for SDRT purposes so no charge under section 87 FA1986 arises on an agreement to transfer the units.
  • The units are not treated as stock or units in a unit trust scheme so are outside the scope of Stamp Duty.