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ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Omar sells quoted UK shares to Pia for £200,000 through a broker on the stock exchange with no stock transfer form. Using the 0.5% rate, which statement is correct on the transaction, and the amount?

Stamp duty reserve tax applies at 0.5% on an electronic share purchase with no transfer document, and the buyer pays it. On £200,000 the charge is £1,000.

  1. ASDRT of £1,000 arises, payable by the buyerCorrect
  2. BStamp duty of £1,000 arises, payable by the seller
  3. CNo tax arises as no document is executed
  4. DSDRT of £2,000 arises, payable by the buyer

Explanation

An agreement to transfer shares without a stamp-dutiable document attracts stamp duty reserve tax at 0.5% of consideration, paid by the buyer. 0.5% x £200,000 = £1,000. Option 3 ignores SDRT; option 4 uses 1%.

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