Autumn Budget 2017: Stamp Duty/Stamp Duty Reserve Tax changes

UK companies issuing shares into clearance services and depositary receipt markets will usually issue their shares into a clearance system or depositary. Stamp duty reserve tax (SDRT) at the rate of 1.5% is charged to reflect the fact that future transfers escape a stamp duty charge of 0.5%.

In the case of HSBC Holdings PLC [2009], the European Court of Justice (ECJ) ruled that the SDRT charge was incompatible with the Capital Duty Directive because it is a tax on raising capital. As a result, HMRC announced that the 1.5% charge would no longer apply to the issue of shares into a EU clearance system. The ECJ, however, argued that the decision should go further and apply to the issue of shares worldwide.

The government have now confirmed that it will continue not to apply the 1.5% SDRT charge on the issue of shares (and transfers integral to capital raising) into overseas clearance systems and depository receipt issuers following the UK’s exit from the European Union.

The government will also legislate to exempt certain transfers of shares and land from stamp taxes when resolving failing financial institutions. The exemption will be limited to transfers to public bodies and affected creditors. This will help simplify and strengthen the process of resolving a failing