STSM031030 - Scope of Stamp Duty Reserve Tax (SDRT): the principal charge
Where a person (A) agrees with another person (B) to transfer chargeable securities (whether or not to person (B)) for consideration in money or money鈥檚 worth, a 0.5% charge to Stamp Duty Reserve Tax (SDRT) arises on the 鈥榬elevant day鈥� (section 87(1) and (2) FA1986).
The relevant day means (section 87(3) FA1986):
- In a case where the agreement is conditional, the day on which the condition, or in a case with several conditions, the day on which the final condition is satisfied, and
- In any other case the day on which the agreement is made.
The charge to SDRT applies regardless of whether or not the agreement to transfer is subsequently settled.
Liable person
Person (B) is liable for SDRT (section 91 FA1986). This will still be the case where, pursuant to the agreement, settlement occurs and聽the chargeable securities are transferred to another person, for example person (C).
Accountable person
While section 91 FA1986 defines the liable person, the provisions of Regulation 2 of the Stamp Duty Reserve Tax Regulations 1986 (SI 1986/1711) define an 鈥榓ccountable person鈥�, who is responsible for giving notice of the agreement to transfer and payment of any relevant SDRT due to HMRC (Regulation 4 SI 1986/1711).
Calculation of the tax
Where SDRT at the rate of 0.5% is due, calculation of the tax is by reference to the amount or value of the consideration paid in money or money鈥檚 worth. The value of any consideration not consisting of money 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 to transfer (section 87(6) and (7) FA1986).聽聽A market value rule can apply in certain circumstances 鈥� see STSM031200 and STSM031300.
Interaction with Stamp Duty
An agreement to transfer and a transfer on sale of securities can give rise to both SDRT and Stamp Duty charges. However the SDRT charge and any SDRT paid on an agreement to transfer can be cancelled and refunded under section 92 FA1986. This applies where an instrument of transfer executed in pursuance of the agreement transfers the shares and is either duly stamped, or is not chargeable with Stamp Duty.
More information
- 厂别别听STSM031090聽for more information on 鈥榗hargeable securities鈥�
- See STSM031040聽for more information on an 鈥榓greement to transfer鈥�
- See STSM031060聽for more information on 鈥榤oney or money鈥檚 worth鈥�
- See STSM016010 for more information on the liable person
- See STSM016020 for more information on the accountable person鈥�