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ACCA P6 Advanced Taxation(uk) (AT uk)

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ACCA Lecturer: Shelley Song

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Chapter 19 Stamp Taxes

1 Stamp Duty

2 Stamp Duty Reserve Tax (SDRT)

3 Stamp Duty Land Tax (SDLT)

4 Exemptions and Reliefs Relating to Stamp Taxes

5 Administration of Stamp Taxes


1 Stamp Duty

➢ Stamp duty applies to transfers of shares and securities which are effected by a paper stock transfer form. It is payable by the purchaser. !

➢ Stamp duty applies at the rate of 0.5% of the consideration unless the transfer falls within one of the specific exemptions (see Section 4). The duty is rounded up to the nearest £5.


Example: Stamp Duty

➢ Ben Harris buys shares using a stock transfer form and pays £1,995.

!➢ The SD rate is 0.5%. So £1,995 × 0.5% =

£9.97. This is rounded up to the nearest £5, which means Ben pays £10 SD.


2 Stamp Duty Reserve Tax (SDRT)

Stamp duty reserve tax (SDRT) is applicable to transfers of shares and securities which are effected by an electronic paperless transaction. It is payable by the purchaser. !SDRT applies at the rate of 0.5% of the consideration unless the transfer falls within one of the specific exemptions (see Section 4).


3 Stamp Duty Land Tax (SDLT)

Stamp duty land tax (SDLT) applies to land transactions in England, Wales and Northern Ireland. !A land transaction is a transfer of land or an interest in, or right over, land. SDLT is generally payable based on the consideration for the land transaction. It is payable by the purchaser. The amount of the charge to SDLT depends on whether the land is residential (eg houses, flats) or non-residential (eg shops, warehouses, factories).


Residential Property Stamp Duty Land Tax

The following rates of SDLT apply to residential property:

➢ Each rate applies to the consideration between the thresholds up to £1,500,000. Consideration in excess of £1,500,000 is taxable at 12%. This method of calculating tax is therefore similar to that used for income tax


Examples: Residential Property

Joanna buys a freehold house in England in August 2015 for £1,650,000. Her stamp duty land tax is calculated as follows: £ £125,000×0% 0 £125,000 (£250,000 – 125,000) ×2% 2,500 £675,000 (£925,000 – 250,000)×5% 33,750 £575,000 (£1,500,000 – 925,000)×10% 57,500 £150,000 (£1,650,000 – 1,500,000)×12% 18,000 £1,650,000 111,750


Non-residential Property SDLT

The following rates of SDLT apply to non-residential property:

➢ For non-residential property the rate of SDLT applies to the whole of the consideration, not just that above the relevant threshold. If value added tax (VAT) is chargeable on the transaction (see later in this text), SDLT is chargeable on the VAT-inclusive amount.


Example: Non-residential Property SDLT

K plc buys a freehold factory in Northern Ireland in August 2015 for £350,000. Its stamp duty land tax is £350,000 × 3% = £10,500. !S Ltd buys a freehold warehouse in England in February 2016 for £1,500,000. Its stamp duty land tax is £1,500,000 × 4% = £60,000.


4 Exemptions and Reliefs Relating to Stamp Taxes

4.1 Transfers of securities traded on a recognised growth market !Stamp duty and stamp duty reserve tax is not chargeable on transfers of securities (eg shares) which are traded on a recognised growth market such as the AIM sub-market of the London Stock Exchange.


4.2 Transfers with no Consideration

Stamp taxes are charged on the consideration passing under the document or transaction. If there is no consideration, there is an exemption from stamp taxes. Examples include: ➢ Gifts (except a gift of land to a connected

company) ➢ A transfer on divorce, annulment of marriage or

judicial separation ➢ Variations of a will or intestacy made within 2 years

of death for no consideration ➢ Transfers to charities if the shares or land is to be

used for charitable purposes !

If land is transferred to a company, for example on incorporation, SDLT is payable on the market value of land.


4.3 Company Transactions

Relief from stamp duty and SDLT is given for transfers of assets between companies within a stamp taxes group. There is no direct relief for stamp duty reserve tax so the transaction must be made by using a stock transfer form and a claim made for stamp duty relief. !There are two conditions which must be met to attract the relief, namely that: ➢ Effect must be to transfer the beneficial interest in

property from one company to another, and ➢ One company must be the parent of the other

company or both companies must have a common parent company.


Stamp Duty Relief for Indirect Holdings

For indirect holdings, it is necessary to reduce the degree of ownership at each level to the appropriate fraction in determining whether the 75% test is met (as for corporation tax group relief) !Allegri Ltd owns 90% of the ordinary share capital of Byrd Ltd, which in turn owns 85% of the ordinary share capital of Corelli Ltd. Shares are transferred from Corelli Ltd to Allegri Ltd under an instrument executed on 1 June 2015. Is stamp duty relief available? !Relief is available, since Allegri Ltd owns indirectly 76½ % (ie 90% x 85%) of the ordinary share capital of Corelli Ltd.


SDLT Relief is Withdrawn

SDLT relief is withdrawn where land has been transferred from one group company to another and within three years of the transfer the transferee company leaves the group whilst still owning the land. !Note that the transferor company leaving the group does not cause the SDLT relief to be withdrawn as the land is still held by the transferee company and so it is still within the group.


5 Administration of Stamp Taxes

(1) Documents which are chargeable to stamp duty must be sent to HMRC (Stamp Taxes) with the duty payable. The document is then impressed with a duty stamp showing the duty paid and the date of payment. !Documents must be presented for stamping within 30 days of execution. Interest runs from this date until the document is stamped, and a late filing penalty may be charged. Unstamped documents are not admissible as evidence.


Administration of Stamp Taxes (Cont.1)

(2) Stamp duty reserve tax is collected automatically when a transaction is made using CREST. !If an off market transaction is dealt with by a stockbroker, the stockbroker will pay the SDRT direct to HMRC. Otherwise, the purchaser must both report the transaction and pay the tax to HMRC by the seventh of the month following the month in which the transaction is made. !The charge to SDRT is cancelled if, within 6 years after the contract date, a duly stamped transfer is produced to HMRC.


Administration of Stamp Taxes (Cont.2)

(3) If a land transaction takes place which is not exempt, a land transaction return must be filed with HMRC (Stamp Taxes) within 30 days of the transaction. There are late filing penalties of £100 if the return is less than 3 months late, or £200 otherwise. HMRC can apply to the Tax Tribunal for a daily penalty, and the penalty is tax geared if the return is over 12 months late. !SDLT is payable within 30 days of the transaction. Interest is charged on late paid tax. !The taxpayer may amend the return within 12 months of the filing date, and HMRC may amend the return to correct obvious errors within 9 months of the actual filing date.

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Chapter 19 stamp taxes - ACCAspace | 特许公认会计师 ... 19 Stamp Taxes 1 Stamp Duty 2 Stamp...

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