STSM022140 | Scope of stamp duty on shares: stamp duty: adjudication, stamps and reliefs: acquisitions by charities

Overview

Section 129 FA1982 provides exemption from Stamp Duty for transfers to any of the following:

• a charitable company

• the trustees of a charitable trust

• the Historic Buildings and Monuments Commission for England (per section 46 FA1983)

Charity

‘Charity’ is defined by Schedule 6 FA2010, paragraph 1. This states that a charity is a body of persons or trust that:

• is established for charitable purposes only

• is subject to the control of a court in the exercise of that court’s jurisdiction with respect to charities. In the UK this is the High Court, the Court of Session in Scotland or the High Court in Northern Ireland. In a country outside the UK this means a court with a corresponding jurisdiction

• has, where required to by the laws of its territory, complied with any requirement to be registered

• is managed by ‘fit and proper’ persons

Schedule 6 FA2010, paragraph 2, defines ‘charitable company’ as a charity that is a body of persons, and ‘charitable trust’ as a charity that is a trust.

Restriction to UK charities

At Spring Budget 2023, it was announced that legislation will be introduced in Spring Finance Bill 2023 to amend the tax definition of a charity for a number of tax purposes, including relating to Stamp Duty and SDRT.

Prior to the change, charities located in the UK, EU or the EEA can qualify for charitable tax reliefs in the UK but following the change, only those charities that come within the jurisdiction of the High Court in England, Wales or Northern Ireland, or the Court of Session in Scotland will qualify for UK charitable tax reliefs.

For Stamp Duty purposes this restriction takes effect:

• On 1 April 2024 for any instruments of transfer executed by a body of persons or trust that has asserted its status as a charity before 15 March 2023

• Otherwise, for any instruments of transfer executed on or after 15 March 2023

A body of persons or trust has ‘asserted its status as a charity’ for these purposes if:

• Immediately before 15 March 2023 it falls within the definition of ‘charity’ in Schedule 6 FA2010, and

• At any time before then, it has (under any enactment) made a valid claim to HMRC in reliance on its status as a charity

How to claim the exemption

Although an exemption rather than a relief, owing to the requirements of section 129 (2) FA1982 the exemption must be claimed by presenting the relevant instrument to HMRC for adjudication, in order for the instrument to be duly stamped. Practical information on how to submit a claim is available on gov.uk.