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ACCA Strategic Professional · Advanced Taxation (UK) · Stamp taxes (stamp duty, stamp duty reserve tax and stamp duty land tax)

Which of the following correctly describes the charge on a purchase of shares in a UK company when the transfer is made by a paperless electronic CREST transaction rather than by a stock transfer form?

Stamp duty reserve tax applies at 0.5% of the consideration. Where shares are transferred electronically with no stock transfer form, there is no document to stamp, so SDRT replaces stamp duty at the same rate.

  1. ANo tax arises on paperless transfers
  2. BStamp duty reserve tax applies at the same 0.5% rate on the considerationCorrect
  3. CStamp duty land tax applies at 2%
  4. DStamp duty applies at 0.5% but is paid by the seller

Explanation

Paperless share transfers have no document to stamp, so stamp duty reserve tax (SDRT) is charged instead, at 0.5% of the consideration, as for stamp duty on a stock transfer form. SDLT concerns land. The buyer, not the seller, bears the charge.

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