Stamp duty reserve tax

Produced by Tolley in association with

Corporation Tax

Guidance

Stamp duty reserve tax (SDRT) was introduced by Finance Act 1986 to ensure that a charge equivalent to stamp duty would apply on the transfer of uncertificated securities. As there is no document transferring the shares in a paperless transaction, and therefore no document to stamp, without SDRT there would be no mechanism to collect the stamp duty.

In practice, the majority of SDRT is paid automatically on stock exchange transactions dealt with electronically via the UK Central Securities Depository (CREST). Analysis of the application of SDRT to financial market trading is not outlined further in this guidance note.

Transfers of securities outside CREST are normally effected by a transfer document on which stamp duty is paid. This generally has the impact of cancelling any SDRT liability (see below). Nevertheless, taxpayers and advisers need to be aware of the potential application of SDRT where there are agreements to transfer securities, in particular looking out for situations where there is an agreement to which SDRT applies but no corresponding document which is subject to stamp duty.

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Sean Randall

Partner at Blick Rothenberg , Corporate Tax

20 years’ “Big Four” stamp duty experience, including building and running KPMG’s UK stamp duty team for five years Chair of the professional body for stamp duty advisers, the Stamp Taxes Practitioners Group (over 200 members) Editor and author of Sergeant and Sims on Stamp Taxes since 2008 Former Tax Writer of the Year Author of the Law Society’s SDLT Handbook: A Guide for Residential Conveyancers Fellow of the Chartered Institute of Taxation Barrister (non-practising) Listed in Spear’s 500

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