Budget Notes


Who is likely to be affected?

1. Any person who executes stock transfer forms or other written instruments to transfer ownership of stock or marketable securities.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to provide that instruments transferring stocks and shares that were previously chargeable with £5 stamp duty will in future be exempt and will not need to be presented to HM Revenue & Customs (HMRC) for stamping.

Operative date

3. The measure will have effect for instruments executed on or after 13 March 2008.

Current law and proposed revisions

4. Under Schedule 13 to the Finance Act 1999, where a transfer of ownership of stocks or marketable securities is effected by a written instrument, the instrument must first be presented to HMRC for stamping with the appropriate amount of stamp duty. Company registrars are not allowed to amend share registers to reflect a change of owner unless the instrument has either been stamped or bears a certificate that it is not chargeable with duty.

5. The law provides for ad valorem stamp duty to be charged on an instrument transferring shares on sale, at the rate of 0.5 per cent of the amount of the consideration given for the shares, rounded up to the nearest £5. Where the consideration is £1,000 or less, the duty payable is therefore limited to £5. There is also a fixed £5 stamp duty charge for instruments transferring shares otherwise than on sale.

6. 68 per cent of transfer instruments currently presented, attract the minimum stamp duty charge of £5 and the cost to business of submitting them for stamping is high. Changes to be made by primary legislation will therefore exempt transfer instruments that would previously have attracted stamp duty of no more than £5, whether fixed or ad valorem. These instruments may therefore in future be sent direct to the company registrar without first being presented to HMRC.

7. Further guidance has been published today on the HMRC website.

Further advice

8. If you have any questions about this change, please contact Miles Harwood on 020 7147 2801 (email: miles.harwood@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk