STSM031220 - Scope of Stamp Duty Reserve Tax (SDRT): Transfers of listed securities and connected persons: Market Value calculation

Finance Bill 2018-19 introduces legislation to provide for a new Stamp Duty and Stamp Duty Reserve Tax (SDRT) market value rule where listed securities are transferred to a company or its nominee (whether or not for consideration), and the person transferring the securities is connected with the company or is the nominee of a person connected with the company.

For the purposes of a 0.5% or 1.5% SDRT charge under section 87 Finance Act 1986 or section 93 and 96 FA86, the value of listed securities on the date of the agreement or transfer is the price which they might reasonably be expected to fetch on a sale in the open market.

In this respect and to determine the market value of the securities, if a taxpayer applies the valuation method set out in The Market Value of Shares, Securities and Strips Regulations 2015 (SI 2015/616), this is acceptable to HMRC Stamp Taxes. Under that, SDRT on an agreement to transfer or transfer is to be calculated by taking the preceding day’s closing prices of the security and applying a mid-point i.e. one half of the difference between the lower and higher share prices added to the lower price.

STSM031210 explains the effective date when market value is to apply

STSM031230 explains the meaning of listed securities

STSM031240 explains the meaning of connected company and connected persons

STSM031250 gives information on CREST system and CREST member input

STSM021305 gives information on Stamp Duty implications on transfers of listed stocks or marketable securities and connected persons