Finance Bill 2016 – Changes to stamp duty share for share relief

The government has announced a new clause for Finance Bill 2016 introducing a change to the rules on stamp duty share-for-share relief with effect from 29 June 2016.

Where shareholders in the acquiring company after the share for share transaction mirror those in the target company immediately prior to the transaction, relief from stamp duty, arising on the disposal of shares in the target company, can be claimed under FA 1986, s 77. The new clause provides that no relief for stamp duty on such a transaction will be available where arrangements are in place for a change of control of the acquiring company at the time of the share-for-share exchange.

Although further guidance is awaited, it would appear that the changes, which were introduced without consultation due to HMRC’s concern over the loss of tax from certain transactions, will not affect family reconstructions and commercially driven demergers where there are no arrangements at the time of the transaction for a change of control of the acquiring company. The new clause will however prevent relief applying in IPO transactions where the interposing of a new company by way of a share for share is used to change control of the company.

The new clause will have effect for any instrument executed on or after 29 June 2016 and will include arrangements entered into before that date.

For further information please contact the TaxDesk on 0845 4900 509 and ask for Martin Mann.