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Stamp Duty – unlisted securities and connected persons

Posted on 12th March 2020

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As previously announced, legislation is being enacted to amend the way Stamp Duty and Stamp Duty Reserve Tax (SDRT) applies on certain transactions between connected persons.

It is intended that the rules will only apply where contrived arrangements are used to minimise tax in circumstances where Stamp Duty relief is not available.

The changes will extend the Stamp Duty and Stamp Duty Reserve Tax (SDRT) “market value rule” so that it applies to the transfer of unlisted securities to connected companies.

Transfers of unlisted securities to connected companies will be caught by the extended market value rule where there is an issue of shares by way of consideration for the transfer.

The legislation will also amend the rules on share for share exchanges so that most share for share exchanges, which are part of a partition demerger arrangement will not have a disqualifying arrangement for the purposes of those sections. In effect, this can prevent charges arising on most capital reduction partition demergers.

The changes will apply with effect from Royal Assent 2020.

It is as important as ever to involve tax experts when undertaking reconstructions and demergers to ensure that the expected tax outcome is achieved.


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