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Overview

Sometimes you don鈥檛 have to pay SDRT on electronic (paperless) transfers of stocks, shares and other securities. This may be because the transaction is exempt or because you can claim a relief.

Transfers that are exempt from Stamp Duty Reserve Tax

Paperless transfers of stocks, shares and other securities are exempt from SDRT (there is no tax to pay) if they are:

• shares that you receive as a gift and that you don鈥檛 pay anything for (either money or some other consideration)
• shares that someone leaves you in their will
• shares that your spouse or partner transfers to you when you marry or enter into a civil partnership
• shares that are transferred when you get divorced, or when your civil partnership is dissolved
• shares held in trust that are transferred from one trustee to another
• shares that are admitted to trading on a recognised growth market but not listed on any market
• transfers that a liquidator makes as settlement to shareholders when a business is wound up

Enquiries about SDRT exemptions

If you鈥檙e not sure whether your transaction is exempt from SDRT, you can contact the SDRT Helpline.

What to do if a transfer is exempt

Off-market transfers

You don鈥檛 need to tell HM Revenue and Customs (HMRC) about exempt off-market transfers. However, you鈥檒l need to keep all the relevant documents so that if HMRC asks, you can demonstrate why SDRT wasn鈥檛 due. HMRC can ask to see proof that the transfer was exempt for up to 6 years after the transaction date.

CREST transfers

For electronic transfers using CREST - the electronic shares settlement and registration system - you鈥檒l need to apply the appropriate CREST transaction status flag. See the later section on 鈥楬ow to claim a Stamp Duty Reserve Tax relief or exemption鈥�.

Transfers that qualify for Stamp Duty Reserve Tax relief

There are some transactions that qualify for relief. As with exemptions, this means there鈥檚 no SDRT due.

The most common reliefs you can claim are:

• transfers of loan capital - generally no SDRT is payable, but there are some exceptions
• sales to intermediaries - there鈥檚 no SDRT to pay when stock is transferred to a recognised intermediary
• repurchases and stock lending - there鈥檚 no SDRT to pay if transfers of stock meet certain conditions
• transfers to charities - there鈥檚 no SDRT to pay so long as certain conditions are met

Paperless transactions that may qualify for Stamp Duty relief

In some cases you can鈥檛 claim SDRT relief directly, but will need to claim Stamp Duty relief instead.

This applies to:

• intra-group relief - for transfers of shares between companies in the same group, if certain conditions are met
• acquisition relief - when one company acquires all the shares in another company but the same people own both companies and the share structure of both companies is identical

If you want to claim either of these reliefs you鈥檒l need to send your documents to HMRC to be stamped. If HMRC accepts your claim for relief from Stamp Duty and the documents are stamped, you won鈥檛 have to pay SDRT either.

You can find out more about the reliefs you can claim in section STM040000 of the Stamp Taxes on Shares Manual.

Enquiries about SDRT relief

If you need help in deciding whether you can claim a SDRT relief you can contact the SDRT Helpline.

How to claim SDRT relief

Off-market transfers

In most cases you don鈥檛 need to do anything to claim relief from SDRT. But you must keep any supporting evidence to show HMRC that the relief was applied correctly if they question it in the future.

Transactions made through CREST

If you鈥檙e claiming an SDRT relief or exemption for a share transaction made through CREST, you鈥檒l enter a specific code - the Transaction Stamp Status (TSS) flag - along with details of the transaction. When the relevant TSS flag is entered into the system, the relief is given automatically. If you鈥檙e transferring shares on your own account your stockbroker will enter the appropriate flag into CREST.

Each TSS flag consists of a capital letter or a number and is associated with a particular relief. You can see the most common TSS flags in the table below.

CREST Transaction Stamp Status (TSS) flags

TSS flag	Stamp Duty Reserve Tax relief/exemption
O	Transfer to/from a nominee, with no change of beneficial owner, or transfer between nominees of the same beneficial owner
S	Transfer to exempt charity
T	SDRT paid through CREST on another CREST transaction
U	Stamp Duty paid outside CREST on a physical document (including form 169), or SDRT paid (or to be paid) outside CREST on a corporate action
W	Issuing house exemption on new issue
3	Intra-group transfer, a letter of direction having been executed
4	Stock loan return or transfer of delivery-by-value collateral relating to loans
5	Letter of direction has been executed (including pension scheme mergers, purchase of life insurance policies and transfers by way of security for loans)
6	Authorised unit trust merger or authorised unit trust/open-ended investment company conversion or amalgamation
7	Stamp liable outside the UK

You鈥檒l need to keep records so that if HMRC asks, you can show them why the transaction was flagged for relief.

If you don鈥檛 claim a relief you鈥檒l have to pay the SDRT in full.

Purchases on behalf of clients acting for exempt charities

If you鈥檙e the 鈥榓ccountable鈥� person for SDRT purposes and you buy shares on behalf of a fund or investment manager acting on behalf of a charity that is exempt from SDRT you鈥檒l need to enter 鈥楽鈥� as the TSS Flag. If your client has an agreement with HMRC not to have to provide you with full details about the charity, you鈥檒l need to enter your client鈥檚 reference number into CREST rather than your own.

If you apply a relief incorrectly

If you apply a relief incorrectly and don鈥檛 pay any SDRT you may have to pay a penalty and interest. This is because you won鈥檛 have paid the correct amount of SDRT by the due date.

Paper transactions - Stamp Duty reliefs and exemptions

Find more about Stamp Duty reliefs and exemptions on paper stock transactions.