FA 1986, Section 87
Type of tax
Stamp duty reserve tax
In scope instruments
Equities and certain equity derivatives and also some loans which have equity like features (e.g. convertibles).
Taxable event (transaction)
Agreement to transfer or to put securities into a depository receipt or clearance service facility.
Territorial connection for liability – condition for taxability is:
Residence of issuer?
Location of transaction (e.g. traded on local stock exchange)?
Location of party (e.g. at least one party to the transaction is resident)?
Residence of financial intermediary?
Other relevant conditions for taxability
Cash settled derivatives are outside the scope of the tax.
Certain recognized intermediaries (financial sector traders) are given an exemption for transactions in securities to promote liquidity where a transaction takes place on a recognized market or takes place in relation to a share which is normally dealt with on a recognized market.
Person responsible for collecting/remitting tax
The transferee or the intermediary
Person who in practice bears the tax
As a rule, the transferee is liable for declaring and paying the tax. However, the professional intermediary (e.g. broker) may have an obligation to act as an "accountable person" on behalf of such a transferee; meaning that such a professional intermediary will have to account for the tax due and notify the tax authorities of the charge.
Penalties in case of failure to file/pay
If one notifies HMRC and pays within 12 months after the deadline, the penalty is the lower of 100 pound sterling (GBP) or the amount of tax that is due. Interest will also be charged on the outstanding tax.
If one notifies HMRC and pays more than 12 months after the deadline, the penalty above is payable as well as an additional penalty, which could be as much as the total amount of tax due. This extra amount can be reduced depending upon the reasons for the delay in payment, the level of co-operation with HMRC and the seriousness of the issue.
Failing to pay stamp duty reserve tax (SDRT) on-time does not affect the legal enforceability of the transactions.
The value is determined according to transfer agreement.
0.5 percent and 1.5 percent on transfers to non-EU depositary receipt and clearance services systems.