STSM021190 | Scope of stamp duty on shares: stamp duty: basics of a charge: block transfers

Where several separate transfers take place that are part of a single transaction (for example, the takeover of a company) HMRC is prepared to help reduce the administrative burden by accepting a block transfer.

A block transfer is a single stock transfer form (STF) with an accompanying schedule which details the various transfers of shares together with the consideration and any Stamp Duty payable for each individual transfer. The STF is stamped with the total of the separate amounts of Stamp Duty relating to each transfer listed on the schedule, with each transfer being rounded up to the next £5.

Often there will be more than one block transfer. For example, one which covers acceptances up to and including the date on which the takeover offer was declared unconditional, one for a specified period after that date and one in respect of dissenting shareholders who originally choose not to sell their shares in the target company, but which are eventually compulsorily acquired.

Transfers involving individual shareholders where the consideration does not exceed £1,000 are entitled to benefit from a £1,000 certificate of value and any such individual transfers do not, if properly certified, attract any Stamp Duty. There need only be one certificate of value, either on the reverse of the STF itself or on the attached schedule.

Separate block transfers must be prepared in respect of chargeable and non chargeable transactions. It is only necessary for the block transfer of chargeable transactions to be sent to HMRC for stamping.

Alternative Method

Stamp Duty can also be calculated in a different way for block transfers. Under the alternative method:

1. Calculate Stamp Duty at the appropriate percentage (0.5% or 1.5%) on the total consideration for all the shares transferred by the block transfer.

2. Next, each individual transfer on the schedule is charged at £2.50 to compensate for the lack of rounding on the individual transfers. So multiply the number of individual transfers on the schedule by £2.50.

3. The amount calculated at (1) is added to the amount calculated at (2).

4. The sum found at (3) is then rounded to the next higher £5. This is the total Stamp Duty payable.

Example

A block transfer form is being used to transfer a number of shares in Company X. The total consideration is £546,938 and the 0.5% rate applies. The schedule attached to the stock transfer form is made up of 22 individual transfers.

Using the above method:

1. £546,938 x 0.5% = £2734.69

2. £2.50 x 22 = £55

3. £2734.69 + £55 = £2789.69

4. Total Stamp Duty (rounded to the next higher £5) = £2790

Whichever method is used, a certificate signed to the effect that the signatory can verify all the transfers on the schedule are correctly detailed should be provided. The STF can be accepted unexecuted if the signed certificate is on the schedule which is attached to the STF.