STSM031150 - Scope of Stamp Duty Reserve Tax (SDRT): relationship with stamp duty
Stamp Duty Reserve Tax (SDRT) captures certain transactions that are outside the scope of Stamp Duty. Its scope is broader both in terms of the transactions and types of consideration and because it has fewer exemptions and exceptions.
Chargeable transactions
Stamp Duty is听charged on transfers on sale of stock or marketable securities. To be within the scope of Stamp Duty, the transfer must be effected听by an instrument of transfer. Section 122 Stamp Act 1891 defines an instrument as including every written document, but in practice it will most commonly be a听stock transfer form.
A Stamp Duty charge also arises听on the SH03 form听used听in connection with听purchases of own shares by companies (see STSM075020)听and on certain transfers of partnership interests (see STSM091050).听听
In contrast, SDRT is a tax on an agreement to transfer chargeable securities. This includes both:
- dematerialised (uncertificated) shares in electronic settlement systems, such as CREST (operated by Euroclear UK & International听Ltd听(EUI)), where there is no听instrument of transfer.
- 바카라 사이트榗hargeable securities바카라 사이트� which are settled outside of an electronic settlement system and where no instrument or document is required to perfect the transaction.
Chargeable consideration
Stamp Duty is charged on the transfer on sale of stock or marketable securities where the amount or value of the consideration paid is in the form of cash, debt or other securities.
In contrast, chargeable consideration for SDRT is 바카라 사이트榤oney or money바카라 사이트檚 worth바카라 사이트�. The value of any non-monetary consideration shall be taken to be the price it might reasonably be expected to fetch on a sale in the open market at the time of the agreement.
Where a transaction is effected by an instrument and either Stamp Duty is paid or a relief or exemption applies,听this will cancel any SDRT charge (see STSM041030).
For example, where the consideration for a transfer on sale of stocks or marketable securities is in the form of an issuance of a life policy (and no other consideration), the issue of a life policy is not regarded as chargeable consideration for Stamp Duty purposes. Where an instrument is executed to effect such a transfer, the instrument is exempt from Stamp Duty and this will cancel any liability to SDRT on the agreement to transfer (section 92 FA1986).
Chargeable securities
In broad terms, while a transfer on sale of 바카라 사이트榮tock or marketable securities바카라 사이트� is chargeable to Stamp Duty, such securities are also 바카라 사이트榗hargeable securities바카라 사이트� for the purposes of a charge to SDRT. Securities transferred which are exempt from Stamp Duty are generally also exempt from SDRT by virtue of section 99(5) FA1986.
The scope of SDRT 바카라 사이트榗hargeable securities바카라 사이트�, however, is wider than 바카라 사이트榮tock and marketable securities바카라 사이트� and extends to other types of securities that do not require execution of an听instrument or document in order for them to be transferred.
Such 바카라 사이트榗hargeable securities바카라 사이트� include a transfer of rights to an allotment of, or rights to subscribe for, or rights to an option to acquire shares, stocks and loan capital. For example, a transfer and sale of a renounceable letter of allotment or acceptance will not be subject to Stamp Duty (as no instrument of transfer is required to be executed) but is a 바카라 사이트榗hargeable security바카라 사이트� for SDRT (section 99(3)(c) FA1986). Renounceable letters of acceptance are rights to securities which are themselves chargeable and, as such, qualify as chargeable securities in their own right.