FB 2019/20: Changes to the SD/SDRT treatment of acquisition of unquoted company shares

Let’s Talk TaxUncategorized

FB 2019/20: Changes to the SD/SDRT treatment of acquisition of unquoted company shares

FB 2019/20: Changes to the SD/SDRT treatment of acquisition of unquoted company shares

Mon 02 Sep 2019

As previously announced the Government plans to introduce measures to prevent the effectiveness of stamp duty ‘swamping’ to avoid stamp duty (SD) or stamp duty reserve tax (SDRT) charges arising on the acquisition of unquoted company shares (draft legislation, explanatory notes and policy paper can be found here). The measure will take effect for instruments executed, agreements to transfer, or the conditions for an agreement to transfer, when these occur on or after the date of Royal Assent of Finance Bill 2019/20.

The amending legislation will work by imputing a market value charge if higher than the consideration actually given, in connected party situations involving an issue of shares. Partition demergers will not be caught where the relevant person has held at least 25% of the target for a period of tax least three years prior to the issue of shares in the acquiring company (the connected company) for consideration.

For a further discussion of the SD/SDRT issues, please get in touch with of the Mazars indirect tax team..

Related posts

Exemption from stamp duty and SDRT on growth shares – action required by 23 April 2014

Under Finance Bill 2014, an exemption will be introduced with effect from 28th April 2014 from stamp duty and SDRT on dealings in equities and other securities  which are admitted to trading on recognised growth markets such as AIM, ISDX and the LSE’s High Growth Segment, provided the securities are not also listed on a […]

Read more

Of Stamps and Swamps

The 2018 Budget has introduced a new market value rule with immediate effect for the transfer of listed shares and securities to a connected company for the purposes of both stamp duty and stamp duty reserve tax (SDRT). Where a person who is connected with a company transfers listed shares or securities to that company, […]

Read more

Finance Bill 2019-20 receives Royal Assent on 22 July 2020

Finance Bill 2020 received Royal Assent on 22 July 2020 (see here).  In relation to Covid-19, perhaps the most immediate consideration for those that have received support payments such as under CJRS, is that: Employers that have either knowingly misused the furlough scheme, or think they may have accidentally done so, have a 90-day window […]

Read more

UK Government does the dance of transparency!

In a backbench revolt on 1 May 2018 the UK Government was forced to back new legislation which will introduce public ownership registers in Britain’s 14 overseas territories.  The concept of public ownership registers was originally proposed by David Cameron and George Osborne back in 2013 and was to apply to non-UK companies following the […]

Read more

Refinements to the additional dwellings surcharge

Although not explicitly referred to by the Chancellor in his speech the government has announced that a number of changes will be made with immediate effect to improve the operation of the higher rates of Stamp Duty Land Tax (SDLT) which can apply an effective 3% surcharge to acquisitions of additional dwellings by individuals. These […]

Read more

SDLT help for first time buyers….. or sellers?

The Chancellor announced that Stamp duty land tax (SDLT) will be abolished with immediate effect for first time buyers purchasing a home for £300,000 or less. For homes costing up to £500,000, no SDLT will be paid on the first £300,000 with 5% being paid on the excess over £300,000.  First time buyers acquiring a […]

Read more

CJEU decision on SDRT

The CJEU has held that a stamp duty reserve tax (SDRT) charge of 1.5% on the transfer of existing shares to the German electronic clearing system (clearstream Frankfurt) was contrary to the EU Directive on indirect capital duties on raising capital (69/335/EEC). The case concerned shares transferred to that exchange as part of a requirement […]

Read more

Stamp duty changes from 29 June 2016 on share for share exchanges

On share for share exchanges, stamp duty may be chargeable on the value of the shares issued on the exchange.  However, there is an important relief from this charge at s77 FA 1986 if the following conditions (at s77(3)) are met: The transfer of shares must form part of an arrangement by which the acquiring […]

Read more

Abolition of special SDRT regime for UK unit trust schemes and UK OEICs

The stamp duty reserve tax (SDRT) charge on surrenders of units in UK unit trust scheme and shares in UK open-ended investment companies (known as ‘OEICs’) has been abolished with effect from 30th March 2014. Managers of UK unit trust schemes therefore no longer have to report and pay this SDRT charge. Transfers of such […]

Read more