Stamp Duty and Stamp Duty Reserve Tax (SDRT) are only levied on the value of the consideration given in a transaction subject to stamp tax. This means that the amount of Stamp Duty or SDRT payable can be unconnected with the value of the assets being transferred, particularly where the parties to the transaction are connected with each other and the transaction is taking place for nil consideration or for non-monetary consideration.
New rules are being introduced that will affect instruments executed or agreements to transfer securities made on or after 29 October 2018. Where there is a conditional agreement to transfer securities, the new rules will apply if that condition is met on or after 29 October.
If the transfer does not benefit from group relief, the new rules will provide that Stamp Duty or SDRT will be levied on the market value of listed securities transferred to a company by a person connected with that company.
If there is actual consideration passing as part of the transaction, then the Stamp Duty or SDRT will be levied on the greater of the value of the consideration and the value of the securities.
This new rule is a highly targeted anti-avoidance rule, aimed at preventing the avoidance of Stamp Duty or SDRT on transfers of high-value share portfolios. It is not intended to affect individual taxpayers or to herald an end to the current rules exempting gifts of shares between family members from tax.