STSM142050 | Stamp duty and SDRT Administration: SDRT Administration: sub-sales (SDRT)

Sub-sales

If A agrees to sell securities to a purchaser (B) who then agrees to sell them to another person (C) (a sub-purchaser) before B’s purchase has been completed, then there are potentially two charges to Stamp Duty Reserve Tax (SDRT).

If a transfer of the securities directly from A to C is effected by an instrument of transfer which is duly stamped it only cancels the SDRT charge on the agreement for the transfer to C. The purchase by the original buyer, B, will still give rise to a charge to SDRT. In other words, there is no “sub-sale relief” under the SDRT legislation.

Such dealing sequences can arise both within CREST (where typically two SDRT charges will be paid) or with residual securities (STSM142020).

For residual securities, the circulation of blank stock transfer forms (not showing the name of the transferee/purchaser) is prohibited by section 67 FA1963.

Where however an initial purchaser (B) sells securities before the delivery of the stock transfer form, the securities transferred can be delivered direct from the original vendor(A) to C, with SDRT being paid by B and Stamp Duty being payable only on the consideration paid by the sub-purchaser (C).