STSM105110 - Collectives: Exemptions: Individual Pension Account

An Individual Pension Account (IPA) is a way of saving for a pension but is not a pension scheme itself. Savers put money into an IPA and this money is invested on their behalf. When the investor retires, the fund is used to purchase a pension from a pension provider.

Sections 93 & 94 Finance Act 2001 introduced an exemption from the Stamp Duty Reserve Tax (SDRT) charge under FA99/SCH19 for transactions in collective investment schemes where units in a unit trust or shares in an open-ended investment company (OEIC) are held within an IPA.

The exemption allows pension savers holding units or OEIC shares within an IPA to adjust their investments within those unit trusts or OEICs without incurring a charge to SDRT.

The SDRT FA99/SCH19 charge on surrenders of units and OEIC shares was however abolished with effect from 30 March 2014 (FA2014/S114(1)) and sections 93 & 94 repealed also with effect from 30 March 2014.

For transactions in units (or OEIC shares) undertaken prior to 30 March 2014 and which are held within an IPA, there are 3 acceptable methods to HM Revenue & Customs (HMRC) that fund managers of unit trusts and OEICs can operate to qualify for an IPA exemption under FA99/SCH19/PARA6A.

These are:

1. The terms of the unit trust must require that all units be held in IPAs, (or in the case of an OEIC, the instrument of incorporation requires that all shares must be held within IPAs).

Where such unit trusts or OEICs are operated, all surrenders and issues of units and OEIC shares will be exempt from a SDRT charge and no monthly notice under FA99/SCH19 is required to be forwarded by the fund manager to HMRC.

2. Where, in the case of an OEIC, the company’s instrument of incorporation has at least one IPA-only share class, and at least one other share class which has no restriction, surrenders of IPA class shares will not be subject to SDRT under FA99/SCH19. No monthly SDRT notice is required to be sent by a fund manager to HMRC where no charge to SDRT arises for a particular month i.e. if all surrenders were of shares in the IPA-only share class.

3. Where unit trusts are operated with a mixture of IPA and non-IPA unit holders, surrenders and issues of units to and from an IPA can be omitted from in the Schedule 19 SDRT monthly computation if, and only if, the person making the relevant monthly tax notice attaches or forwards a certificate to HMRC under FA99/SCH19/PARA6A confirming that:

(a) At all times in the period to which the notice relates, the trustee or manager (as appropriate) was able to identify which of the units under the scheme were held within IPAs; and

(b) At no time in that period has the trustee or manager imposed any charge on, or recovered any amount from, an IPA holder which included an amount directly or indirectly attributable to SDRT payable under FA99/SCH19

The Stamp Duty and Stamp Duty Reserve Tax (Definition of Unit Trust Scheme and Open-Ended Investment Company) Regulations 2001 (SI 2001/964) provides information on the meaning of an IPA.

See STSM101010 for the meaning of a Collective Investment Scheme.

See STSM101020 for the meaning of a unit trust.

See STSM101050 for the meaning of an OEIC.