IFM41110 - Stamp Duty and SDRT: background
FA22/SCH2/PT10 exempts repurchases by a QAHC of shares and loan capital which it had previously issued, subject to certain anti-avoidance provisions.
Stamp Duty
Stamp Duty is charged on instruments (documents) that transfer on sale, the beneficial interest of stock or marketable securities. The most common of these is the Stock Transfer Form, but any document that completes an agreement to buy and sell stock or marketable securities falls within the Stamp Duty charge. The Stamp Act 1891 provides that an instrument chargeable with Stamp Duty may not be registered or used unless it has been duly stamped.
Since March 2020 transfer instruments (including form SH03 to record the purchase of own shares – see IFM41120) are now submitted to HMRC electronically (see STSM011015). In place of a physical stamp on the transfer instrument, HMRC issues a letter confirming that duty has been paid or a claim for relief has been adjudicated. Instruments processed under this system are ‘duly stamped’ for all purposes.
Stamp Duty Reserve Tax (SDRT)
Because Stamp Duty is charged on instruments rather than transactions, transfers that do not require the execution of a written instrument are outside its scope.
SDRT is a tax on agreements to transfer chargeable securities and applies regardless of whether there is an instrument of transfer.
While an agreement to transfer and a transfer on sale of securities can give rise to SDRT and Stamp Duty charges, the SDRT charge and any SDRT already paid on the agreement can be cancelled and refunded under FA86/S92 if an instrument of transfer used to effect that agreement is executed, and either duly stamped (with Stamp Duty being paid) or is not chargeable with Stamp Duty.
‘Chargeable securities’ as defined in FA86/S99 does not include securities which are exempt from all stamp duties (FA86/S99(5) & (5ZA)).
The Stamp Duty and SDRT legislation contain various exemptions and reliefs not specifically related to QAHCs for example, the loan capital exemption (FA86/S79) and group relief (FA30/S42). These apply in the same way to QAHC transactions as they do for other companies.
Further information on Stamp Duty and SDRT can be found in the Stamp Taxes on Shares Manual.
Further details of the online system from March 2020 can be found in STSM011015.