Finance Act 1986

• (2) A sum paid to any person by way of supplement under section 20 of the Finance Act 1985 (repayment supplement in respect of certain delayed value added tax payments) shall be disregarded for all purposes of corporation tax and income tax.

Associated companies: oil and gas industry

54

• (1) At the end of section 19 of the Oil Taxation Act 1975 (definitions relating to the corporation tax provisions of that Act) there shall be added the following subsection—

(4) Without prejudice to subsection (3) above, for the purposes of this Part of this Act, two companies are also associated with one another if one has control of the other or both are under the control of the same person or persons; and in this subsection "control" shall be construed in accordance with section 302 of the Taxes Act.

• (2) This section has effect in relation to any allowance or distribution made, interest paid or other thing done after 18th March 1986.

Chapter II — Capital Allowances

New code of allowances for capital expenditure on mineral extraction

55

Agricultural land and buildings

56

• (1) With respect to capital expenditure incurred on or after 1st April 1986, other than expenditure under existing contracts, the provisions of Schedule 15 to this Act shall have effect in place of section 68 of the Capital Allowances Act 1968 (allowances for capital expenditure on construction of agricultural buildings and works etc.).

• (2) In subsection (1) above "expenditure under existing contracts" means expenditure which—

• (a) consists of the payment of sums under a contract entered into on or before 13th March 1984 by the person incurring the expenditure; and

• (b) is incurred before 1st April 1987.

• (3) The preceding provisions of this section and Schedule 15 to this Act shall be construed as if they were included in Part I of the Capital Allowances Act 1968.

• (4) In section 69 of the Capital Allowances Act 1968—

• (a) after the words "section 68 above" there shall be inserted "and Schedule 15 to the Finance Act 1986"; and

• (b) at the end of the definition of "agricultural land" after the word "husbandry" there shall be inserted "(as defined below)"; and

• (c) at the end of the section there shall be added—

• 'husbandry' includes any method of intensive rearing of livestock or fish on a commercial basis for the production of food for human consumption.

• (5) Where an allowance is or has been made under Schedule 15 to this Act in respect of any capital expenditure, none of that expenditure shall be taken into account in determining qualifying expenditure for the purpose of any allowance or charge under section 44 of the Finance Act 1971 (machinery and plant); and where such an allowance or charge is or has been made by reference to an amount of qualifying expenditure which took account of a particular amount of capital expenditure, that capital expenditure shall be left out of account for the purposes of Schedule 15 to this Act.

• (6) Any reference to Chapter V of Part I of the Capital Allowances Act 1968 in—

• (a) section 14 of that Act (exclusion of double allowances), and

• (b) section 85 of that Act (allowances in respect of contributions to capital expenditure), and

• (c) paragraph 11 of Schedule 12 to the Finance Act 1982 (capital allowances for dwelling-houses let on assured tenancies),

includes a reference to Schedule 15 to this Act; and the reference to section 68 of the said Act of 1968 in section 75 thereof (writing-down allowances during a period of specified length) includes a reference to that Schedule.

• (7) In the following provisions—

• (a) sections 155(8), 180(7), 227(4), 252(2) and 352(4) of the Taxes Act,

• (b) the definition of "capital allowance" in section 526(5) of the Taxes Act,

• (c) section 31(2) of the Capital Gains Tax Act 1979, and

• (d) the definition of "capital allowance" in subsection (4) of section 34 of the said Act of 1979,

any reference to the Capital Allowances Act 1968 or to Part I thereof includes a reference to Schedule 15 to this Act.

New expenditure on leased assets etc.

57

• (1) The provisions of subsections (4) to (8) below and Schedule 16 to this Act (which relate to allowances in respect of expenditure on the provision of machinery or plant for leasing and on the provision of certain vehicles) shall have effect with respect to new expenditure, as defined in subsections (2) and (3) below.

• (2) In this section and Schedule 16 to this Act, new expenditure means expenditure incurred on or after 1st April 1986, other than—

• (a) expenditure to which, by virtue of sub-paragraph (2) of paragraph 2 of Schedule 12 to the Finance Act 1984 (expenditure incurred under contracts entered into on or before 13th March 1984), sub-paragraph (1) of that paragraph (progressive withdrawal of first-year allowances) does not apply; and

• (b) expenditure to which, by virtue of paragraph 4 of that Schedule (transitional relief for regional projects) Part I of that Schedule does not apply; and

• (c) expenditure falling within paragraph 7 of Schedule 12 to the Finance Act 1980 (television sets, etc); and

• (d) expenditure excluded by subsection (3) below;

and any expenditure which, by virtue of paragraph 6 of Schedule 12 to the Finance Act 1984 (spreading of expenditure under certain contracts) is deemed for the purposes of Chapter I of Part III of the Finance Act 1971 to be incurred on 1st April 1986 shall also be deemed to be incurred on that date for the purposes of this section and Schedule 16 to this Act.

• (3) In any case where—

• (a) before 1st April 1986 a person (in this subsection referred to as "the original lessor") incurred expenditure on the provision of machinery or plant for leasing, and

• (b) on or after that date the machinery or plant ceases to belong to the original lessor on being acquired by an associate or successor of his, and

• (c) by virtue of subsection (9) of section 64 of the Finance Act 1980 (connected persons etc.), the machinery or plant is treated for the purposes of subsection (8) of that section (the requisite period) as continuing to belong to the original lessor so long as it belongs to his associate or successor,

expenditure incurred by his associate or successor on the acquisition of the machinery or plant is excluded from new expenditure; and in this subsection "associate or successor" means a person who, in relation to the original lessor, is of a description specified in paragraph (a) or paragraph (b) of the said subsection (9).

• (4) Subject to subsection (7) below, the separate pooling provisions which are contained in sections 64 to 68 of the Finance Act 1980 and which are applicable to expenditure on machinery or plant which is not used for a qualifying purpose shall not apply to new expenditure but, for the purpose of maintaining a separate pool for expenditure falling within section 70 of the Finance Act 1982 (assets leased outside the United Kingdom) and for excluding from that section certain ships, aircraft and transport containers.—

• (a) sections 64 to 68 of the Finance Act 1980 shall have effect as amended by Part I of Schedule 16 to this Act;

• (b) section 70 of, and Schedule 11 to, the Finance Act 1982 shall have effect as amended by Part II of that Schedule; and

• (c) Part III of that Schedule shall have effect for supplementing the enactments amended by Parts I and II of that Schedule.

• (5) In consequence of the preceding provisions of this section, in paragraph 8A of Schedule 8 to the Finance Act 1971 (writing-down allowances for ships) sub-paragraph (9) shall be omitted.

• (6) In consequence of the preceding provisions of this section, but subject to subsection (7) below, in subsection (6)(b) of section 57 of the Finance Act 1985 (short-life assets: transfer of expenditure on asset beginning to be used otherwise than for a qualifying purpose)—

• (a) the words "(as it has effect in accordance with section 65 of the Finance Act 1980)" shall be omitted; and

• (b) for the words from "the separate trade" onwards there shall be substituted "his actual trade".

• (7) Notwithstanding anything in the preceding provisions of this section, section 44 of the Finance Act 1971 shall continue to apply separately with respect to expenditure on the provision of any vehicle falling within section 69 of the Finance Act 1980 (writing-down allowances for cars) and, accordingly.—

• (a) except where such a vehicle is used for the purpose of being leased to such a person as is referred to in paragraphs (a) and (b) of subsection (1) of section 70 of the Finance Act 1982 and the leasing is not short-term leasing, within the meaning of that section, nothing in Parts I to III of Schedule 16 to this Act applies with respect to any such expenditure; and

• (b) the amendments made by subsection (6) above do not apply where the asset in question is a vehicle falling within section 69 of the Finance Act 1980.

• (8) In consequence of the withdrawal of first-year allowances by section 58 of, and Schedule 12 to, the Finance Act 1984, section 69 of the Finance Act 1980 shall be amended, with respect to new expenditure, in accordance with Part IV of Schedule 16 to this Act.

• (9) In section 64 of the Finance Act 1980, as it has effect where-

• (a) the expenditure on the provision of machinery or plant referred to in subsection (1) of that section is not new expenditure, but

• (b) the notional purchase of the machinery or plant by the lessee which is referred to in subsection (2)(a) of that section would at any time mean the incurring of new expenditure,

after the words "could have been made to the lessee" there shall be inserted "(disregarding for this purpose paragraph 2 of Schedule 12 to the Finance Act 1984)".

• (10) In section 56 of the Finance Act 1985 (time when capital expenditure is incurred) at the end of subsection (1) there shall be added

and (e) section 57 of the Finance Act 1986

.

Chapter III — CAPITAL GAINS

Gifts into dual resident trusts

58

Disposals of options and contracts for gilt-edged securities etc.

59

Small part disposals

60

Chapter IV — Securities

Stock lending

61

Amendments of Finance Act 1985

62

Schedule 17 to this Act (which contains amendments of provisions of the Finance Act 1985 about securities) shall have effect.

Other provisions

63

Schedule 18 to this Act (which contains other provisions about securities) shall have effect.

PART III — STAMP DUTY

Securities

Stock or marketable securities: reduction of rate

64

Bearers: consequential provisions etc.

65

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Company's purchase of own shares

66

• (1) This section applies where a company purchases its own shares under section 690 of the Companies Act 2006 ....

• (2) Any return which relates to any of the shares purchased and is delivered to the registrar of companies under section 707 of that Act ... shall be charged with stamp duty, and treated for all purposes of the Stamp Act 1891 , as if it were an instrument transferring the sharesto which it relates on sale to the company in pursuance of the contract (or contracts) of purchase concerned.

• (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Subject to subsection (4) below, this section applies to any such return which is delivered to the registrar of companies on or after the day of The Stock Exchange reforms.

• (4) This section does not apply to any return to the extent that the shares to which it relates were purchased under a contract entered into before the day of The Stock Exchange reforms.

• (5) In this section “the day of The Stock Exchange reforms” means the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

Depositary receipts

Depositary receipts

67

• (1) Subject to subsection (9) below, subsection (2) or (3) below (as the case may be) applies where an instrument ... transfers relevant securities of a company incorporated in the United Kingdom to a person who at the time of the transfer falls within subsection (6), (7) or (8) below.

• (1A) For the purposes of subsection (1) “instrument” does not include—

• (a) a bearer instrument (see subsection (9A));

• (b) an exempt capital-raising instrument (see section 72ZA);

• (c) an exempt listing instrument (see section 72ZB).

• (2) If stamp duty is chargeable on the instrument under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the rate at which that duty is chargeable is 1.5% of—

• (a) the amount or value of the consideration for the sale to which the instrument gives effect, or

• (b) where subsection (2A) applies—

• (i) the amount or value of the consideration for the sale to which the instrument gives effect, or

• (ii) if higher, the value of the securities at the date the instrument is executed.

• (2A) This subsection applies where the instrument transferring the securities is executed pursuant to—

• (a) the exercise of an option to buy or to sell the securities, and

• (b) either—

• (i) a term of the option which provides for the securities to be transferred to the person falling within subsection (6), (7) or (8), or

• (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

• (3) If stamp duty is not chargeable on the instrument under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale)—

• (a) stamp duty is chargeable on the instrument under this subsection, and

• (b) subject to subsection (5), the rate at which that duty is chargeable is 1.5% of the value of the securities at the date the instrument is executed.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) In a case where —

• (a) securities are issued, or securities sold are transferred, and (in either case) they are to be paid for in instalments,

• (b) the person to whom they are issued or transferred holds them and transfers them to another person when the last instalment is paid,

• (c) the transfer to the other person is effected by an instrument in the case of which subsection (3) above applies,

• (d) before the execution of the instrument mentioned in paragraph (c) above an instrument is received by a person falling (at the time of the receipt) within subsection (6), (7) or (8) below,

• (e) the instrument so received evidences all the rights which (by virtue of the terms under which the securities are issued or sold as mentioned in paragraph (a) above) subsist in respect of them at the time of the receipt, and

• (f) the instrument mentioned in paragraph (c) above contains a statement that paragraphs (a), (b) and (e) above are fulfilled,

subsection (3) above shall have effect as if the reference to the value there mentioned were to an amount (if any) equal to the total of the instalments payable, less those paid before the transfer to the other person is effected.

• (6) A person falls within this subsection if his business is exclusively that of holding relevant securities —

• (a) as nominee or agent for a person whose business is or includes issuing depositary receipts for relevant securities, and

• (b) for the purposes of such part of the business mentioned in paragraph (a) above as consists of issuing such depositary receipts (in a case where the business does not consist exclusively of that).

• (7) A person falls within this subsection if —

• (a) he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument, and

• (b) his business is or includes issuing depositary receipts for relevant securities.

• (8) A person falls within this subsection if —

• (a) he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument,

• (b) he does not fall within subsection (6) above but his business includes holding relevant securities as nominee or agent for a person who falls within subsection (7)(b) above at the time of the transfer, and

• (c) he holds relevant securities as nominee or agent for such a person, for the purposes of such part of that person's business as consists of issuing depositary receipts for relevant securities (in a case where that business does not consist exclusively of that).

• (8A) Where an instrument transfers shares or stock or marketable securities admitted to trading on a recognised growth market but not listed on any market, subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

• (8B) In subsection (8A) “listed” and “recognised growth market” are to be construed in accordance with section 99A below.

• (9) Where an instrument transfers relevant securities of a company incorporated in the United Kingdom —

• (a) to a company which at the time of the transfer falls within subsection (6) above . . . , and

• (b) from a company which at that time falls within that subsection . . . ,

subsections (2) to (5) above shall not apply and stamp duty is not chargeable on the instrument.

• (9ZA) Where an instrument transfers shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise), subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

• (9A) In this section “bearer instrument” has the meaning given in paragraph 3 of Schedule 15 to the Finance Act 1999.

• (10) This section applies to any instrument executed on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

Depositary receipts: notification

68

• (1) A person whose business is or includes issuing depositary receipts for relevant securities of a company incorporated in the United Kingdom shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first issues such depositary receipts.

• (2) A person whose business includes (but does not exclusively consist of) holding relevant securities (being securities of a company incorporated in the United Kingdom)—

• (a) as nominee or agent for a person whose business is or includes issuing depositary receipts for relevant securities, and

• (b) for the purposes of such part of the business mentioned in paragraph (a) above as consists of issuing such depositary receipts (in a case where the business does not consist exclusively of that),

shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first holds such relevant securities as such a nominee or agent and for such purposes.

• (3) A company which is incorporated in the United Kingdom and becomes aware that any shares in the company are held by a person such as is mentioned in subsection (1) or (2) above shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which the company first becomes aware of that fact.

• (4) A person who fails to comply with subsection (1) or (2) above shall be liable to a penalty not exceeding £1,000.

• (5) A company which fails to comply with subsection (3) above shall be liable to a penalty not exceeding £100.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depositary receipts: supplementary

69

• (1) For the purposes of sections 67, 68 and 72ZB a depositary receipt for relevant securities is an instrument acknowledging—

• (a) that a person holds relevant securities or evidence of the right to receive them, and

• (b) that another person is entitled to rights, whether expressed as units or otherwise, in or in relation to relevant securities of the same kind, including the right to receive such securities (or evidence of the right to receive them) from the person mentioned in paragraph (a) above,

except that for those purposes a depositary receipt for relevant securities does not include an instrument acknowledging rights in or in relation to securities if they are issued or sold under terms providing for payment in instalments and for the issue of the instrument as evidence that an instalment has been paid.

• (2) The Treasury may by regulations provide that for subsection (1) above (as it has effect for the time being) there shall be substituted a subsection containing a different definition of a depositary receipt for the purposes of sections 67 and 68 above.

• (3) References in this section and sections 67 and 68 above to relevant securities, or to relevant securities of a company, are to shares in or stock or marketable securities of any company (which, unless otherwise stated, need not be incorporated in the United Kingdom).

• (4) For the purposes of section 67(2)(b)(ii) and (3) above the value of securities at the date the instrument is executed shall be taken to be the price they might reasonably be expected to fetch on a sale at that time in the open market.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) The power to make regulations or an order under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

Clearance services

Clearance services

70

• (1) Subject to subsection (9) and section 97A below, subsection (2) or (3) below (as the case may be) applies where an instrument ... transfers relevant securities of a company incorporated in the United Kingdom to a person who at the time of the transfer falls within subsection (6), (7) or (8) below.

• (1A) For the purposes of subsection (1) “instrument” does not include—

• (a) a bearer instrument (see subsection (9A));

• (b) an exempt capital-raising instrument (see section 72ZA);

• (c) an exempt listing instrument (see section 72ZB).

• (2) If stamp duty is chargeable on the instrument under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale), the rate at which that duty is chargeable is 1.5% of—

• (a) the amount or value of the consideration for the sale to which the instrument gives effect, or

• (b) where subsection (2A) applies—

• (i) the amount or value of the consideration for the sale to which the instrument gives effect, or

• (ii) if higher, the value of the securities at the date the instrument is executed.

• (2A) This subsection applies where the instrument transferring the securities is executed pursuant to—

• (a) the exercise of an option to buy or to sell the securities, and

• (b) either—

• (i) a term of the option which provides for the securities to be transferred to the person falling within subsection (6), (7) or (8), or

• (ii) a direction, given by or on behalf of the person entitled or bound to acquire the securities pursuant to the exercise of the option, for the securities to be so transferred.

• (3) If stamp duty is not chargeable on the instrument under Part 1 of Schedule 13 to the Finance Act 1999 (transfer on sale)—

• (a) stamp duty is chargeable on the instrument under this subsection, and

• (b) subject to subsection (5), the rate at which that duty is chargeable is 1.5% of the value of the securities at the date the instrument is executed.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) In a case where —

• (a) securities are issued, or securities sold are transferred, and (in either case) they are to be paid for in instalments,

• (b) the person to whom they are issued or transferred holds them and transfers them to another person when the last instalment is paid,

• (c) the transfer to the other person is effected by an instrument in the case of which subsection (3) above applies,

• (d) before the execution of the instrument mentioned in paragraph (c) above an instrument is received by a person falling (at the time of the receipt) within subsection (6), (7) or (8) below,

• (e) the instrument so received evidences all the rights which (by virtue of the terms under which the securities are issued or sold as mentioned in paragraph (a) above) subsist in respect of them at the time of the receipt, and

• (f) the instrument mentioned in paragraph (c) above contains a statement that paragraphs (a), (b) and (e) above are fulfilled,

subsection (3) above shall have effect as if the reference to the value there mentioned were to an amount (if any) equal to the total of the instalments payable, less those paid before the transfer to the other person is effected.

• (6) A person falls within this subsection if his business is exclusively that of holding relevant securities —

• (a) as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities, and

• (b) for the purposes of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that).

• (7) A person falls within this subsection if —

• (a) he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument, and

• (b) his business is or includes the provision of clearance services for the purchase and sale of relevant securities.

• (8) A person falls within this subsection if —

• (a) he is specified for the purposes of this subsection by the Treasury by order made by statutory instrument,

• (b) he does not fall within subsection (6) above but his business includes holding relevant securities as nominee or agent for a person who falls within subsection (7)(b) above at the time of the transfer, and

• (c) he holds relevant securities as nominee or agent for such a person, for the purposes of such part of that person's business as consists of the provision of clearance services for the purchase and sale of relevant securities (in a case where that business does not consist exclusively of that).

• (8A) Where an instrument transfers shares or stock or marketable securities admitted to trading on a recognised growth market but not listed on any market, subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

• (8B) In subsection (8A) “listed” and “recognised growth market” are to be construed in accordance with section 99A below.

• (9) Where an instrument transfers relevant securities of a company incorporated in the United Kingdom —

• (a) to a company which at the time of the transfer falls within subsection (6) above . . . , and

• (b) from a company which at that time falls within that subsection . . . ,

subsections (2) to (5) above shall not apply and stamp duty is not chargeable on the instrument.

• (9ZA) Where an instrument transfers shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise), subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

• (9A) In this section “bearer instrument” has the meaning given in paragraph 3 of Schedule 15 to the Finance Act 1999.

• (10) This section applies to any instrument executed on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

Clearance services: notification

71

• (1) A person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities of a company incorporated in the United Kingdom shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first provides such clearance services.

• (2) A person whose business includes (but does not exclusively consist of) holding relevant securities (being securities of a company incorporated in the United Kingdom)—

• (a) as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of relevant securities, and

• (b) for the purposes of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that),

shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which he first holds such relevant securities as such a nominee or agent and for such purposes.

• (3) A company which is incorporated in the United Kingdom and becomes aware that any shares in the company are held by a person such as is mentioned in subsection (1) or (2) above shall notify the Commissioners of that fact before the end of the period of one month beginning with the date on which the company first becomes aware of that fact.

• (4) A person who fails to comply with subsection (1) or (2) above shall be liable to a penalty not exceeding £1,000.

• (5) A company which fails to comply with subsection (3) above shall be liable to a penalty not exceeding £100.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Clearance services: supplementary

72

• (1) References in sections 70 and 71 above to relevant securities, or to relevant securities of a company, are to shares in or stock or marketable securities of any company (which, unless otherwise stated, need not be incorporated in the United Kingdom).

• (2) For the purposes of section 70(2)(b)(ii) and (3) above the value of securities at the date the instrument is executed shall be taken to be the price they might reasonably be expected to fetch on a sale at that time in the open market.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reconstructions and acquisitions

Reconstructions etc: amendments

73

Reconstructions etc: repeals

74

• (1) The following provisions shall cease to have effect—

• (a) section 55 of the Finance Act 1927 and section 4 of the Finance Act (Northern Ireland) 1928 (reconstructions and amalgamations);

• (b) paragraph 12(1) and (1A) of Schedule 18 to the Finance Act 1980 (demergers);

• (c) sections 78, 79 and 80 of the Finance Act 1985 (takeovers and winding-up).

• (2) In paragraph 12(3) of Schedule 18 to the Finance Act 1980 for the words “sub-paragraph (2) above” there shall be substituted the words “this paragraph”.

• (3) This section applies to any instrument executed in pursuance of a contract made on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

Acquisitions: reliefs

75

• (1) This section applies where a company (the acquiring company) acquires the whole or part of an undertaking of another company (the target company) in pursuance of a scheme for the reconstruction of the target company.

• (2) If the first and second conditions (as defined below) are fulfilled, stamp duty under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale)shall not be chargeable on an instrument executed for the purposes of or in connection with the transfer of the undertaking or part.

• (3) An instrument on which stamp duty is not chargeable by virtue only of subsection (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

• (4) The first condition is ... that the consideration for the acquisition—

• (a) consists of or includes the issue of non-redeemable shares in the acquiring company to all the shareholders of the target company;

• (b) includes nothing else (if anything) but the assumption or discharge by the acquiring company of liabilities of the target company.

In paragraph (a) above, “non-redeemable shares” means shares which are not redeemable shares.

• (5) The second condition is that—

• (a) the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, income tax, corporation tax or capital gains tax,

• (b) after the acquisition has been made, each shareholder of each of the companies is a shareholder of the other, and

• (c) after the acquisition has been made, the proportion of shares of one of the companies held by any shareholder is the same , or as nearly as may be the same, as the proportion of shares of the other company held by that shareholder.

• (5A) If immediately before the acquisition the target company or the acquiring company holds any of its own shares, the shares are to be treated for the purposes of subsections (4) and (5) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).

• (6) This section applies to any instrument which is executed after 24th March 1986 unless it is executed in pursuance of an unconditional contract made on or before 18th March 1986.

• (7) This section shall be deemed to have come into force on 25th March 1986.

Acquisitions: further provisions about reliefs

76

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Acquisition of target company's share capital

77

• (1) Stamp duty under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) shall not be chargeable on an instrument transferring shares in one company (the target company) to another company (the acquiring company) if the conditions mentioned in subsection (3) below are fulfilled.

• (2) An instrument on which stamp duty is not chargeable by virtue only of subsection (1) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

• (3) The conditions are that —

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) the transfer forms part of an arrangement by which the acquiring company acquires the whole of the issued share capital of the target company,

• (c) the acquisition is effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, stamp duty reserve tax, income tax, corporation tax or capital gains tax,

• (d) the consideration for the acquisition consists only of the issue of shares in the acquiring company to the shareholders of the target company,

• (e) after the acquisition has been made, each person who immediately before it was made was a shareholder of the target company is a shareholder of the acquiring company,

• (f) after the acquisition has been made, the shares in the acquiring company are of the same classes as were the shares in the target company immediately before the acquisition was made,

• (g) after the acquisition has been made, the number of shares of any particular class in the acquiring company bears to all the shares in that company the same proportion , or as nearly as may be the same proportion, as the number of shares of that class in the target company bore to all the shares in that company immediately before the acquisition was made, ...

• (h) after the acquisition has been made, the proportion of shares of any particular class in the acquiring company held by any particular shareholder is the same , or as nearly as may be the same, as the proportion of shares of that class in the target company held by him immediately before the acquisition was made, and

• (i) at the time the instrument mentioned in subsection (1) is executed there are no disqualifying arrangements, within the meaning given by section 77A, in existence.

• (3A) If immediately before the acquisition the target company or the acquiring company holds any of its own shares, the shares are to be treated for the purposes of subsection (3)(b) to (h) as having been cancelled before the acquisition (and, accordingly, the company is to be treated as if it were not a shareholder of itself).

• (4) In this section and section 77A references to shares and to share capital include references to stock.

• (5) This section applies to any instrument executed on or after 1st August 1986.

Loan capital, letters of allotment etc.

Loan capital

78

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) In this section “loan capital” means—

• (a) any debenture stock, corporation stock or funded debt, by whatever name known, issued by a body corporate or other body of persons (which here includes a local authority and any body whether formed or established in the United Kingdom or elsewhere);

• (b) any capital raised by such a body if the capital is borrowed or has the character of borrowed money, and whether it is in the form of stock or any other form;

• (c) stock or marketable securities issued by the government of any country or territory outside the United Kingdom;

• (d) any capital raised under arrangements to which section 564G of the Income Tax Act 2007 or section 507 of the Corporation Tax Act 2009 (alternative finance investment bonds) applies .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) In this section “designated international organisation” means an international organisation designated for the purposes of section 324 of the Taxes Act 1988 by an order made under subsection (1) of that section.

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loan capital: new provisions

79

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Stamp duty under Schedule 15 to the Finance Act 1999 (bearer instruments) shall not be chargeable ... on the transfer of the loan capital constituted by, or transferable by means of, an instrument which relates to loan capital.

• (3) Stamp duty shall not be chargeable on an instrument which transfers loan capital issued or raised by —

• (a) the financial support fund of the Organisation for Economic Co-operation and Development,

• (b) the Inter-American Development Bank, or

• (c) an organisation which was a designated international organisation at the time of the transfer (whether or not it was such an organisation at the time the loan capital was issued or raised).

• (4) Subject to subsections (5) and (6) below, stamp duty shall not be chargeable on an instrument which transfers any other loan capital.

• (5) Subsection (4) above does not apply to an instrument transferring loan capital which, at the time the instrument is executed, carries a right (exercisable then or later) of conversion into shares or other securities, or to the acquisition of shares or other securities, including loan capital of the same description.

• (6) Subject to subsections (7) to (7B) below, subsection (4) above does not apply to an instrument transferring loan capital which, at the time the instrument is executed or any earlier time, carries or has carried —

• (a) a right to interest the amount of which exceeds a reasonable commercial return on the nominal amount of the capital,

• (b) a right to interest the amount of which falls or has fallen to be determined to any extent by reference to the results of, or of any part of, a business or to the value of any property, or

• (c) a right on repayment to an amount which exceeds the nominal amount of the capital and is not reasonably comparable with what is generally repayable (in respect of a similar nominal amount of capital) under the terms of issue of loan capital listed in the Official List of The Stock Exchange.

• (7) Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(a) or (c) above by reason only that the loan capital concerned carries a right to interest, or (as the case may be) to an amount payable on repayment, determined to any extent by reference to an index showing changes in the general level of prices payable in the United Kingdom over a period substantially corresponding to the period between the issue or raising of the loan capital and its repayment.

• (7A) Subsection (4) above shall not be prevented from applying to an instrument by virtue of subsection (6)(b) above by reason only that the loan capital concerned carries a right to interest which—

• (a) reduces in the event of the results of a business or part of a business improving, or the value of any property increasing, or

• (b) increases in the event of the results of a business or part of a business deteriorating, or the value of any property diminishing.

• (7B) Subsection (4) shall not be prevented from applying to a capital market instrument by virtue of subsection (6)(b) by reason only that the capital market investment concerned carries or has carried a right to interest which ceases or reduces if, or to the extent that, the issuer, after meeting or providing for other obligations specified in the capital market arrangement concerned, has insufficient funds available from that capital market arrangement to pay all or part of the interest otherwise due.

• (8) Where stamp duty is chargeable under Part I of Schedule 13 to the Finance Act 1999 (conveyance or transfer on sale) on an instrument which transfers loan capital, the rate at which duty is charged under that Part shall be 0.5% of the amount or value of the consideration for the sale to which the instrument gives effect.

• (8A) In the application of this section to loan capital that falls within paragraph (d) of section 78(7) (alternative finance investment bonds)—

• (a) subsection (6) has effect as if—

• (i) paragraph (a) were omitted, and

• (ii) for paragraph (c) there were substituted—

(c) a right at the end of the bond term (within the meaning of section 564G(1) of the Income Tax Act 2007 or section 507(1) of the Corporation Tax Act 2009) to a payment of an amount that exceeds the aggregate of— (i) the amount paid for the issue of the bond, and (ii) the notional payment amount; and for this purpose the “notional payment amount” means the amount of the payments that would represent a reasonable commercial return (within the meaning of section 564G(1) of the Income Tax Act 2007 or section 507(1) of the Corporation Tax Act 2009) on the bond over the bond term, less the amount of the payments actually made.

,

• (b) subsections (6)(b), (7), (7A), (7B) and (13) have effect as if references to interest were references to additional payments (“additional payments” having the same meaning as in section 564G of the Income Tax Act 2007 or section 507 of the Corporation Tax Act 2009), and

• (c) subsections (7B) and (13) also have effect as if—

• (i) references to a capital market investment were references to the loan capital falling within paragraph (d) of section 78(7), and

• (ii) references to a capital market arrangement were to the arrangements under which that loan capital is raised.

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) Subsections (7), (9) . . . of section 78 above shall apply as if references to that section included references to this.

• (13) In this section—

• “capital market instrument” means an instrument transferring a capital market investment issued as part of a capital market arrangement, and

• “capital market investment” and “capital market arrangement” have the same meaning as in section 72B of the Insolvency Act 1986 (see paragraphs 1 to 3 of Schedule 2A to that Act).

Bearer letters of allotment etc.

80

Changes in financial institutions

Sales to market makers

81

Borrowing of stock by market makers

82

Composition agreements

83

Miscellaneous exemptions

84

• (1) In section 127(1) of the Finance Act 1976 (no stamp duty on transfer to stock exchange nominee executed for purposes of a stock exchange transaction) the words “ which is executed for the purposes of a stock exchange transaction ” shall be omitted.

• (2) Stamp duty shall not be chargeable on an instrument effecting a transfer of stock if —

• (a) the transferee is a recognised investment exchange or a nominee of a recognised investment exchange, and

• (b) an agreement which relates to the stamp duty which would (apart from this subsection) be chargeable on the instrument, and was made between the Commissioners and the investment exchange under section 33 of the Finance Act 1970, is in force at the time of the transfer.

• (3) Stamp duty shall not be chargeable on an instrument effecting a transfer of stock if —

• (a) the transferee is a recognised clearing house , a recognised CSD... or a third country CSD or a nominee of a recognised clearing house , a recognised CSD... or a third country CSD, and

• (b) an agreement which relates to the stamp duty which would (apart from this subsection) be chargeable on the instrument, and was made between the Commissioners and the clearing house under section 33 of the Finance Act 1970 , is in force at the time of the transfer.

• (4) Subsection (1) above applies to any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms.

• (5) Subsection (2) above applies to any instrument giving effect to a transaction carried out on or after such day as the Commissioners may appoint by order made by statutory instrument.

• (6) Subsection (3) above applies to any instrument giving effect to a transaction carried out on or after such day as the Commissioners may appoint by order made by statutory instrument.

Supplementary

85

• (1) Section 42(1) of the Finance Act 1920 (reduction of duty in case of certain transfers to jobbers or nominees or qualified dealers) shall have effect, in the case of any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms as if the following were omitted —

• (a) in that subsection, the words “ a jobber or his nominee or to”and in the proviso to it the words “jobber or”(in each place);

• (b) in subsection (3) of that section, paragraph (d) of the definition of “qualified dealer”(Stock Exchange brokers).

• (2) Section 34 of the Finance Act 1961 and section 4 of the Finance Act (Northern Ireland) 1961 (borrowing of stock by jobbers) shall not apply where stock is transferred in discharge of an undertaking given on or after the day of The Stock Exchange reforms.

• (3) Section 42(1) of the Finance Act 1920 shall not apply to any transfer giving effect to a transaction carried out on or after such day as is specified for this purpose in regulations made under section 81(5) above; and different days may be so specified for different purposes.

• (4) Section 127(2) of the Finance Act 1976 (transfer otherwise than on sale from stock exchange nominee to jobber) shall not apply to any transfer giving effect to a transaction carried out on or after the day of The Stock Exchange reforms.

• (5) In sections 81, 82 and 84 above and this section—

• (a) “the day of The Stock Exchange reforms” means the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished,

• (b) references to a recognised investment exchange are to a recognised investment exchange within the meaning given by section 285(1)(a) of the Financial Services and Markets Act 2000,

• (c) “recognised clearing house”, “recognised CSD”, ... and “third country CSD” have the meanings given by section 285(1)(b), (e)... and (g) of the Financial Services and Markets Act 2000,

• (d) “stock” includes marketable security.

Part IV — Stamp Duty Reserve Tax

Introduction

The tax: introduction

86

• (1) A tax, to be known as stamp duty reserve tax, shall be charged in accordance with this Part of this Act.

• (2) The tax shall be under the care and management of the Board.

• (3) Section 1 of the Provisional Collection of Taxes Act 1968 shall apply to the tax; and accordingly in subsection (1) of that section after the words “petroleum revenue tax” there shall be inserted the words “ stamp duty reserve tax ”.

• (4) Stamp duty reserve tax shall be chargeable in accordance with the provisions of this Part of this Act—

• (a) whether the agreement, transfer, issue or appropriation in question is made or effected in the United Kingdom or elsewhere, and

• (b) whether or not any party is resident or situate in any part of the United Kingdom.

The principal charge

The principal charge

87

• (1) This section applies where a person (A) agrees with another person (B) to transfer chargeable securities (whether or not to B) for consideration in money or money's worth.

• (2) There shall be a charge to stamp duty reserve tax under this section on . . . the relevant day, . . .

• (3) In subsection (2) above “the relevant day” means —

• (a) in a case where the agreement is conditional, the day on which the condition is satisfied, and

• (b) in any other case, the day on which the agreement is made.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) Tax under this section shall be charged at the rate of 0.5 per cent. or part of £100 of the amount or value of the consideration mentioned in subsection (1) above.

• (7) For the purposes of subsection (6) above the value of any consideration not consisting of money shall be taken to be the price it might reasonably be expected to fetch on a sale in the open market at the time the agreement mentioned in subsection (1) above is made.

• (7A) Where—

• (a) there would be no charge to tax under this section, or

• (b) there would, under section 92 below, be a repayment or cancellation of tax,

in relation to some of the chargeable securities to which the agreement between A and B relates if separate agreements had been made between them for the transfer of those securities and for the transfer of the remainder, this section and sections 88(5) and 92 below shall have effect as if such separate agreements had been made.

• (7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) This section applies where the agreement to transfer is made on or after the day on which the rule of The Stock Exchange that prohibits a person from carrying on business as both a broker and a jobber is abolished.

• (10) This section has effect subject to sections 88 to 90 below.

Section 87: special cases

88

• (1) An instrument on which stamp duty is not chargeable by virtue of —

• (aa) paragraph 24(d) of Schedule 13 to the Finance Act 1999 (renounceable letters of allotment etc.),

• (a) section 127(1) of the Finance Act 1976 (transfer to stock exchange nominee), or

• (b) section 84(2) or (3) above,, or

• (c) Part I of Schedule 19 to the Finance Act 1999 (transfers etc. of units in unit trusts),

shall be disregarded in construing section 92(1A) and (1B) below.

• (1A) An instrument on which stamp duty is not chargeable by virtue of section 186 of the Finance Act 1996 (transfers of securities to members of electronic transfer systems etc) shall be disregarded in construing section 92(1A) and (1B) below unless—

• (a) the transfer is made by a stock exchange nominee; and

• (b) the maximum stamp duty chargeable on the instrument, apart from section 186 of the Finance Act 1996, would be £5;

and in this subsection “stock exchange nominee” means a person designated for the purposes of section 127 of the Finance Act 1976 as a nominee of The Stock Exchange by an order made by the Secretary of State under subsection (5) of that section.

• (1B) An instrument on which stamp duty is not chargeable by virtue of section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 (transfer between associated bodies corporate) shall be disregarded in construing section 92(1A) and (1B) below in any case where—

• (a) the property mentioned in section 42(2)(a) of the Finance Act 1930 or, as the case may be, section 11(2)(a) of the Finance Act (Northern Ireland) 1954 consists of or includes chargeable securities of any particular kind acquired in the period of two years ending with the day on which the instrument was executed; and

• (b) the body corporate from which the conveyance or transfer there mentioned is effected acquired any of those chargeable securities—

• (i) in a transaction which was given effect by an instrument of transfer on which stamp duty was not chargeable by virtue of section 80A above;

• (ii) in pursuance of an agreement to transfer securities as regards which section 87 above did not apply by virtue of section 88A below; . . .

• (iia) in pursuance of an agreement to transfer securities which was made for the purpose of performing the obligation to transfer chargeable securities described in section 89AA(1)(a) below and as regards which section 87 above did not apply by virtue of section 89AA(2) below; or

• (iii) in circumstances with regard to which the charge to stamp duty or stamp duty reserve tax was treated as not arising by virtue of regulations under section 116 or 117 of the Finance Act 1991.

• (1C) Where—

• (a) there is an arrangement falling within subsection (1) of section 80C above (stamp duty relief for transfers in accordance with certain arrangements for B to transfer stock to A or his nominee and for A or his nominee to transfer stock of the same kind and amount back to B or his nominee), and

• (b) under the arrangement stock is transferred to A or his nominee by an instrument on which stamp duty is not chargeable by virtue only of section 80C(2) above, but

• (c) it becomes apparent that stock of the same kind or amount will not be transferred to B or his nominee by A or his nominee in accordance with the arrangement,

then, if section 80D does not apply, the instrument shall be disregarded in construing section 92(1A) and (1B) below.

• (1D) Where—

• (a) an instrument transferring stock in accordance with an arrangement is stamped under section 80C(5) above, but

• (b) the instrument should not have been so stamped because the arrangement fell within section 80C(4)(a) or (b) above, and

• (c) apart from section 80C above stamp duty would have been chargeable on the instrument,

the instrument shall be deemed to be duly stamped under section 80C(5) above, but shall be disregarded in construing section 92(1A) and (1B) below.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) If chargeable securities cannot (apart from this subsection) be identified for the purposes of subsection (1B) above, securities shall be taken as follows, that is to say, securities of the same kind acquired later in the period of two years there mentioned (and not taken for the purposes of that subsection in relation to an earlier instrument) shall be taken before securities acquired earlier in that period.

• (5) If, in the case of an agreement (or of two or more agreements between the same parties) to transfer chargeable securities—

• (a) the conditions in section 92(1A) and (1B) below are not satisfied by virtue only of the application of subsection (1B) above in relation to the instrument (or any one or more of the two or more instruments) in question, but

• (b) not all of the chargeable securities falling to be regarded for the purposes of that subsection as transferred by the instrument (or by the two or more instruments between them) were acquired as mentioned in paragraphs (a) and (b) of that subsection,

stamp duty reserve tax shall be repaid or cancelled under section 92 below in accordance with subsection (5A) below.

• (5A) Any repayment or cancellation of tax falling to be made by virtue of subsection (5) above shall be determined as if (without prejudice to section 87(7A) above) there had, instead of the agreement (or the two or more agreements) in question been—

• (a) a separate agreement (or two or more separate agreements) relating to such of the securities as were acquired as mentioned in paragraphs (a) and (b) of subsection (1B) above, and

• (b) a single separate agreement relating to such of the securities as do not fall within those paragraphs,

and as if the instrument in question (or the two or more instruments in question between them) had related only to such of the securities as do not fall within those paragraphs.

• (6) Where a person enters into an agreement for securities to be transferred to him or his nominee, the securities shall be treated for the purposes of subsections (1B)(a) and (4) above as acquired by that person at the time when he enters into the agreement, unless the agreement is conditional, in which case they shall be taken to be acquired by him when the condition is satisfied.

Section 87: exceptions for market makers etc.

89

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 87: other exceptions

90

• (1) Section 87 above shall not apply as regards an agreement to transfer a unit under a unit trust scheme to or from the managers under the scheme.

• (1A) Section 87 above shall not apply as regards an agreement to transfer a unit under a unit trust scheme if an instrument executed at the same time as the agreement and giving effect to the agreement would be exempt from stamp duty (if stamp duty were otherwise chargeable) by virtue of—

• (a) section 42 of the Finance Act 1930 or section 11 of the Finance Act (Northern Ireland) 1954 (transfers between associated companies), or

• (b) regulations under section 87(2) of the Finance Act 1985 (power to exempt instruments from stamp duty of fixed amount) , or

• (c) section 96 of the Finance Act 1997 (demutualisation of insurance companies).

• (1B) Section 87 above shall not apply as regards an agreement to transfer trust property to the unit holder on the surrender to the managers of a unit under a unit trust scheme if the unit holder is to receive only such part of each description of asset in the trust property as is proportionate to, or as nearly as practicable proportionate to, the unit holder's share.

For these purposes there is a surrender of a unit where—

• (a) a person (“P”) authorises or requires the trustees or managers of a unit trust scheme to treat P as no longer interested in a unit under the scheme, or

• (b) a unit under the unit trust scheme is transferred to the managers of the scheme,

and the unit is a chargeable security.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Section 87 above shall not apply as regards an agreement to transfer securities constituted by or transferable by means of —

• (a) a non-UK bearer instrument;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3A) Section 87 above shall not apply as regards an agreement to transfer chargeable securities constituted by or transferable by means of a UK bearer instrument unless subsection (3B), (3C) or (3E) below applies to the instrument.

• (3B) This subsection applies to any instrument which falls within the exemption conferred by paragraph 16 of Schedule 15 to the Finance Act 1999 (renounceable letters of allotment etc.).

• (3C) This subsection applies to an instrument if—

• (a) the instrument was issued by a body corporate incorporated in the United Kingdom (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)); and

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) the instrument is not exempt.

• (3D) An instrument is exempt for the purposes of subsection (3C) above if—

• (a) the chargeable securities in question are, or a depositary receipt for them is, listed on a recognised stock exchange; and

• (b) the agreement to transfer those securities is not made in contemplation of, or as part of an arrangement for, a takeover of the body corporate which issued the instrument.

• (3E) This subsection applies to an instrument if—

• (a) the instrument was issued by a body corporate incorporated in the United Kingdom (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea));

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) by virtue of section 79(5) (convertible loan capital) or 79(6) (loan capital carrying special rights) above, stamp duty would be chargeable on an instrument transferring the loan capital to which the instrument relates; and

• (d) the instrument is not exempt.

• (3F) An instrument is exempt for the purposes of subsection (3E) above if—

• (a) the chargeable securities in question are, or a depositary receipt for them is, listed on a recognised stock exchange;

• (b) the agreement to transfer those securities is not made in contemplation of, or as part of an arrangement for, a takeover of the body corporate which issued the instrument; and

• (c) those securities do not carry any right of the kind described in section 79(5) above (right of conversion into, or acquisition of, shares or other securities) by the exercise of which chargeable securities which are not listed on a recognised stock exchange may be obtained.

• (4) Section 87 above shall not apply as regards an agreement which forms part of an arrangement.

• (a) falling within section 93(1) or 96(1) below , or

• (b) which would fall within section 93(1) or section 96(1) if the references in section 93 or section 96 (as the case may be) to the transfer of chargeable securities included the issue of chargeable securities.

• (5) Section 87 above shall not apply as regards an agreement to transfer securities which the Board are satisfied are held, when the agreement is made, by a person within subsection (6) below.

• (6) A person is within this subsection if his business is exclusively that of holding shares, stock or other marketable securities —

• (a) as nominee or agent for a person whose business is or includes the provision of clearance services for the purchase and sale of shares, stock or other marketable securities, and

• (b) for the purpose of such part of the business mentioned in paragraph (a) above as consists of the provision of such clearance services (in a case where the business does not consist exclusively of that); and in this subsection, 'marketable securities' shall be construed in accordance with section 122(1) of the Stamp Act 1891 .

• (7) Section 87 above shall not apply as regards an agreement to transfer securities to —

• (a) a charitable company, or

• (b) the trustees of a charitable trust, or

• (c) the Trustees of the National Heritage Memorial Fund, or

• (d) the Historic Buildings and Monuments Commission for England. ...

• (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7A) Section 87 above does not apply as regards an agreement to transfer any shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise).

• (7B) Section 87 above does not apply as regards—

• (a) an agreement to transfer chargeable securities—

• (i) to a depositary under a co-ownership contractual scheme, to be held as part of the property subject to the scheme, in exchange for the issue of units in the scheme (and for no other consideration);

• (ii) in relation to a co-ownership contractual umbrella scheme, on transfers between sub-schemes;

• (b) an agreement to transfer units in a co-ownership contractual scheme.

• (7BA) In subsection (7B) and this subsection—

• “authorised contractual scheme” has the meaning given in section 237(3) of the Financial Services and Markets Act 2000;

• “co-ownership contractual scheme” means—an authorised contractual scheme, ora Reserved Investor Fund (Contractual Scheme);

• “co-ownership contractual umbrella scheme” means a co-ownership contractual scheme—which provides arrangements for separate pooling of the contributions of participants and of the profits or income out of which payments are to be made to them, andunder which the participants are entitled to exchange rights in one pool for rights in another;

• “depositary” has the meaning given in section 237(2) of the Financial Services and Markets Act 2000;

• “Reserved Investor Fund (Contractual Scheme)” has the meaning given by section 20 of the Finance (No.2) Act 2024;

• “sub-scheme”, in relation to a co-ownership contractual umbrella scheme, means such of the arrangements as relate to a separate pool;

• “units” has the meaning given in section 237(2) of the Financial Services and Markets Act 2000.

• (7C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7D) Subsection (7B) shall not apply where the agreement forms part of arrangements of which the main purpose, or one of the main purposes, is the avoidance of stamp duty or stamp duty reserve tax.

• (8) For the purposes of subsections (3D) and (3F) above—

• (a) references to a depositary receipt for chargeable securities shall be construed in accordance with section 94(1) below;

• (b) references to anything listed on a recognised stock exchange shall be construed in accordance with section 1005 of the Income Tax Act 2007;

• (c) there is a takeover of a body corporate if a person, on his own or together with connected persons, loses or acquires control of it.

• (9) For the purposes of subsection (8) above—

• (a) any question whether a person is connected with another shall be determined in accordance with section 286 of the Taxation of Chargeable Gains Act 1992;

• (b) “control” shall be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010 .

Liability to tax

91

• (1) Where tax is charged under section 87 above as regards an agreement, B shall be liable for the tax.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Repayment or cancellation of tax

92

• (1) If, as regards an agreement to transfer securities to B or his nominee, tax is charged under section 87 above and it is proved to the Board's satisfaction that at a time on or after the relevant day (as defined in section 87(3)) but before the expiry of the period of six years (beginning with that day) the conditions mentioned in subsections (1A) and (1B) below have been fulfilled, subsections (2) to (4A) of this section shall apply.

• (1A) The first condition is that an instrument is (or instruments are) executed in pursuance of the agreement and the instrument transfers (or the instruments between them transfer) to B or, as the case may be, to his nominee all the chargeable securities to which the agreement relates.

• (1B) The second condition is that the instrument (or each instrument) transferring the chargeable securities to which the agreement relates—

• (a) so far as those securities are stock or marketable securities within the meaning of section 125 of the Finance Act 2003 (abolition of stamp duty except on instruments relating to stock or marketable securities)—

• (i) is duly stamped in accordance with the enactments relating to stamp duty, or

• (ii) is not chargeable with stamp duty or otherwise required to be stamped under those enactments; or

• (b) so far as those securities are not stock or marketable securities within the meaning of that section, is an instrument that, disregarding that section, would not be chargeable with any ad valorem stamp duty under those enactments.

• (1C) If, as regards an agreement to transfer shares in a company to that company (“the own-shares agreement”)—

• (a) tax is charged under section 87 above, and

• (b) it is proved to the Board’s satisfaction that at a time in the period of six years beginning on the relevant day (as defined in section 87(3)) the conditions mentioned in subsection (1D) have been fulfilled in respect of those shares,

subsections (2) to (4A) apply.

• (1D) The conditions referred to in subsection (1C) are—

• (a) that, in relation to the transfer made in pursuance of the own-shares agreement, a return has been made in respect of each of those shares in accordance with section 707 of the Companies Act 2006 (disclosure by company of purchase of own shares), and

• (b) that any such return has been duly stamped in accordance with section 66.