Finance Bill Tracking Service 2010 | Budget 2010

BN23 STAMP DUTY AND STAMP DUTY RESERVE TAX RELIEF FOR MEMBERS OF CLEARING HOUSES

Who is likely to be affected?

1. Entities that are members of clearing houses, the clearing houses themselves, existing and planned securities trading platforms, and the buyers and sellers of UK securities that want their trades to be cleared.

General description of the measure

2. Legislation will be introduced in Finance Bill 2010 to make explicit that the power to make regulations to remove multiple charges to stamp duty or stamp duty reserve tax (SDRT), extends to regulations providing relief for members of clearing houses and their nominees.

Operative date

3. The measure will have effect on and after the date that Finance Bill 2010 receives Royal Assent.

Current law and proposed revisions

4. Where transactions in UK securities are cleared through a central counterparty such as a clearing house, a chain of transactions will arise involving exchange members, their nominees, the clearing house itself, and the members and nominees of the clearing house, each of which can potentially give rise to a charge to stamp duty or SDRT for what is essentially a single transaction of sale and purchase. To stop these multiple charges arising, HM Treasury can, under powers contained in sections 116 and 117 of the Finance Act (FA) 1991, make regulations that remove all but the last of them.

5. The powers currently extend to transactions involving an exchange, a member or nominee of an exchange, a nominee of a member of an exchange, a clearing house, or a nominee of a clearing house. Transactions involving members of clearing houses, and nominees of such members, are not, however, explicitly included. The Select Committee on Statutory Instruments (report dated 9 December 2009) suggested that regulations made recently may have gone beyond the scope of the enabling power, and this has resulted in confusion and uncertainty amongst financial market participants.

6. The amendments provide that the power to make regulations under sections 116 and 117 of FA 1991 is extended so that members of clearing houses and their nominees are explicitly to be provided with relief in respect of transactions prescribed in regulations.

7. To provide clarity in respect of regulations that have already been made, the amendments will be regarded as always having had effect.

Further advice

8. If you have any questions about this change, please contact Andrew Hewitt on 020 7147 0092 (email: andrew.hewitt@hmrc.gsi.gov.uk) or Simon English on 020 7147 2808 (email: simon.english@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk