Budget Notes

BN54 STAMP DUTY: CHANGES TO LOAN CAPITAL EXEMPTION

Who is likely to be affected?

1. Individuals and companies wishing to invest in debt securities on the capital markets.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to provide exemption from stamp duty on transfers of loan capital, which are subject to a capital market arrangement on limited recourse terms.

Operative date

3. These changes will have effect for transfers of loan capital on or after the date that Finance Bill 2008 receives Royal Assent.

Current law and proposed revisions

4. Section 79(4) of the Finance Act 1986 currently exempts from stamp duty most forms of loan capital. But where the right to interest on a loan capital instrument is determined to any extent by the results of a business or value of any property, the exemption does not apply and transfers of that loan capital are subject to ad valorem stamp duty.

5. This measure will provide that where the loan capital instrument does not meet the exemption criteria for the reasons described above, it will nevertheless qualify for exemption from stamp duty if it is also (a) party to a capital market arrangement and (b) the right to interest is on limited recourse terms.

Further advice

6. If you have any questions about this change, please contact Nicky Rass on 020 7147 2802 (email: Nicola.Rass@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk