Budget 2016: Increase in Stamp Duty/SDRT payable on Deep In The Money Options

A “Deep in the money option” is an option with an exercise price/strike price which is either significantly below (for a call option) or above (for a put option) the market value of the underlying asset.

Where a registered UK company share is transferred as result of an option, Stamp Duty or Stamp Duty Reserve Tax is currently calculated and paid on the strike price rather than on the market value of the share.

As announced in the Autumn statement, for options which are entered into on or after 25 November 2015 and which are exercised on or after March 16 2016, the Stamp Duty or Stamp Duty Reserve Tax will now be charged at the 1.5% higher rate of stamp duty, based on the higher of the market value of the share and the option strike price.

 

This will only impact holders of Deep In The Money Options.