STSM031130 | Scope of Stamp Duty Reserve Tax (SDRT): chargeable securities - units under a unit trust scheme

Units under a unit trust scheme are ‘chargeable securities’, except where:

• all trustees are resident outside the UK and the unit is not UK registered (FA86/S99(5A)(a)), or

• the trust property can only be invested in exempt investments as defined at FA86/S99 (5A)(b)) - see STSM105020.

Unit holders may sell their rights and interests in the unit trust. Where units are surrendered and transferred to the manager of the trust, FA99/SCH19/PARA2 imposes a SDRT charge if the surrender was undertaken before 30 March 2014.

Where units are transferred on sale to a third party for consideration and the manager of the trust is notified of the transaction so that the unit register can be updated to reflect the purchase, no SDRT charge arises by virtue of FA86/S90(1) if the transfer is undertaken on or after 30 March 2014.

Where:

• a beneficial interest in and rights to units is agreed to be transferred to a third party purchaser; and

• the purchase is not required to be notified to the manager for updating the unit register because the transaction does not require involve a change in the legal title of the units; then

• the agreement will incur a 0.5% SDRT charge calculated on the consideration paid in money or money’s worth (FA86/S87).

Unit trusts are considered in greater detail at STSM100000.