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STSM042610 | Exemptions and reliefs: reliefs: UK Listing Relief: When Relief Starts and Ends

From HM Revenue & Customs · Stamp Taxes on Shares Manual

When relief starts

A listing relief period starts when the shares (or depositary interests in shares) of a company are admitted to the official list at a time when no other shares (or depositary interests in shares) of the company were included in the official list.

The meaning of being included in the official list can be found in STSM042600.

There are special rules regarding when a listing relief period starts for companies that are commonly referred to as ‘Special Purpose Acquisition Companies’ (SPACs). Further information about the special rules for SPACs can be found in STSM042620.

Securities issued by a company in the form of debt, for example bonds, loan notes, debentures etc which are admitted to the official list will not start a listing relief period. However, once a company is in a listing relief period, all securities of a company are covered by the relief.

When a UK Listing Relief period cannot start

A listing relief period cannot start in certain circumstances related to changes of control, mergers, or the insertion of a holding company involving listed companies.

1) Changes of control and mergers involving listed companies (Exclusion A)

This exclusion applies where the first listing of a company’s shares (or depositary interests in shares) was connected to arrangements under which either:

  • a listed company took control of another listed company,

  • a company took control of two or more listed companies, or

  • two or more listed companies merged all or substantially all of their businesses.

Where this exclusion applies it will prevent a new listing relief period starting.

2) Insertion of a Holding company (Exclusion B)

This exclusion applies if:

  1. the first listing was connected to arrangements by which the company took control of another company, and

  2. immediately before those arrangements, the other company was-

The reference to “listed other than by reference to depositary interests” means that the exclusion will not apply if only depositary interests in the other company are listed immediately before the arrangements. If the other company had both listed shares and listed depositary interests, the exclusion will apply.

This exclusion will prevent a new listing relief period starting for the new holding company by virtue of the new listing.

If the existing listed company that the new holding company has taken control of (the “other company”) was within an existing listing relief period, the exclusion will not end that listing relief period.

When relief ends

A relief period for a company ends either:

  • 3 years from when a company’s shares (or depositary interests in shares) are first listed,

  • The company’s listing of its shares (or depositary interests in shares) is cancelled before the end of the listing relief period (the suspension of a company’s shares/depositary interests will not end a listing relief period), or

  • There is a change of control in the company (Exclusion C). No relief is available on agreements to transfer which form part of arrangements changing control in the company (the change of control itself will end the listing relief period). The accountable person will need to account for the SDRT due outside of CREST directly to HMRC. Details of how to do this can be found in STSM042650.

"Control” has the meaning given in section 1124 of the Corporation Taxes Act 2010. The legislation does not define “change of control”, but in practice HMRC considers that Exclusion C captures takeovers and mergers where there is a change of control, not day to day transactions between unconnected minority shareholders.

If a company’s securities have been set with an exempt status in CREST due to UK listing relief, the securities tax status in CREST will need to be amended to taxable (see STSM042640).

Examples

Example 1

51% of the shareholders in a company change as a result of ordinary share trades before the end of the listing relief period. This would not be captured by Exclusion C.

Example 2

Company B is a newly listed company. The initial free float put into the market is 30% of Company B’s issued share capital, with 70% retained by the family. Before the end of the 3-year listing relief period, the family sell down a further 21% through ordinary, day to day transactions, such that their holding falls to 49%. This would not be captured by Exclusion C.