STSM115010 - Derivatives: warrants - stamp implications: issue or grant of a warrant

Stamp Duty

Following the decision in George Wimpey & Co Ltd v IRC [1975] 2 All ER 45, where a written instrument issues or grants a warrant, then if:

• The warrant is capable of settlement by way of a transfer of the stock or marketable security per section 122 Stamp Act 1891 (see STSM021040) over which it is granted;
• The warrant itself is a stock or marketable security; and
• Chargeable consideration is paid for the warrant (see STSM021050, STSM021060 and STSM021070);

then the instrument is within the scope of Stamp Duty, which is calculated by reference to the consideration.

However if the warrant is only capable of cash settlement then it will be outside the scope of a Stamp Duty charge.

Stamp Duty Reserve Tax (SDRT)

As the issue or granting of a warrant (or share warrant) represents an agreement to grant rights, rather than an agreement to transfer existing rights in an underlying equity or security, no SDRT charge arises under section 87 Finance Act 1986.