STSM011045 - Introduction to Stamp Duty on shares and Stamp Duty Reserve Tax (SDRT): Stamp Duty and SDRT basics- Transfer of Intellectual Property and/ or Goodwill with Stock or Marketable Securities

Patents, trademarks, registered designs, copyright and design rights are forms of property which are sometimes referred to collectively as intellectual property (IP).

Stamp Duty has not been chargeable on transfers of IP since 28 March 2000. The charge was abolished by section 129 Finance Act 2000.

Sometimes goodwill attaches to IP. Trademarks, for example, are often sold with the goodwill associated with the trademark. Where goodwill is derived from IP it will be regarded as falling within section 129.

Separately, the Stamp Duty charge on the transfer of all goodwill, including unrelated “loose” goodwill (which has no links to any IP) was removed with effect from 23 April 2002 by section 116 Finance Act 2002.

Stamp Duty remains chargeable on instruments of transfer on or after 28 March 2000 which deal in part with IP and in part with other property on which Stamp Duty is due, as set out in Schedule 34 to the Finance Act 2000.

So, for example, if an instrument effects the transfer of both stock or marketable securities and IP, Stamp Duty is only charged on the proportion of chargeable consideration that relates to the stock or marketable securities. Schedule 34 provides that the apportionment of the consideration must be ‘just and reasonable’.

The same principles apply where an instrument effects the transfer of both stock or marketable securities and goodwill on or after 23 April 2002. Here, Schedule 37 Finance Act 2002 similarly provides that a ‘just and reasonable’ apportionment must be carried out between the goodwill and other property transferred.