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What is Stamp Duty Reserve Tax?
When you buy shares electronically in the UK, you'll usually pay Stamp Duty Reserve Tax (SDRT) rather than traditional Stamp Duty. In most cases, your broker or investment platform handles this automatically, deducting the tax from your transaction without you needing to do anything. However, if...
When you buy shares electronically in the UK, you'll usually pay Stamp Duty Reserve Tax (SDRT) rather than traditional Stamp Duty. In most cases, your broker or investment platform handles this automatically, deducting the tax from your transaction without you needing to do anything. However, if you buy shares outside the standard electronic system, you'll need to pay HMRC directly and notify them of the transaction.
What is Stamp Duty Reserve Tax?
Stamp Duty Reserve Tax (SDRT) is a tax charged on the paperless purchase of shares. It applies when you buy shares electronically rather than using a paper stock transfer form.
SDRT should not be confused with:
- Stamp Duty on shares – which applies when you buy shares using a paper stock transfer form
- Stamp Duty Land Tax – which applies when you buy or transfer property
SDRT covers two types of electronic share transactions:
- Trades made through the CREST system (the UK's main electronic settlement system for shares)
- Trades made outside CREST (known as 'off-market' trades)
How SDRT is collected through CREST
Most share purchases in the UK go through CREST, which is a computerised register of shares and shareholders. If you buy shares through a stockbroker or investment platform, your transaction will almost certainly use this system.
When you buy shares through CREST, the system automatically deducts SDRT from the transaction and pays it directly to HMRC. You don't need to make any manual payment or send any notice to HMRC – it all happens behind the scenes.
Your broker or investment platform will show the SDRT charge on your transaction confirmation, so you can see what has been paid on your behalf.
When you need to pay SDRT yourself
If you buy shares outside the CREST system – in what's called an 'off-market' transaction – you become responsible for paying the SDRT and notifying HMRC.
You must send HMRC a written notice that includes:
- The buyer and seller details
- What securities have been transferred and how many
- Any relief or exemption you're claiming
- Details of the payment made, including the monetary value
- A reference number that you choose, so HMRC can identify your payment
If you've made multiple transactions in a reporting period, you must provide details of each individual transaction separately.
You should allow 3 working days for your notice to reach HMRC.
Payment deadlines for off-market transactions
The deadline depends on whether your transaction could have been made through CREST but wasn't, or whether it couldn't have been made through CREST at all.
If the transaction could have been made through CREST but wasn't:
You must pay the SDRT and send your notice within 14 days from the date of the trade.
If the transaction could not have been made through CREST:
You must pay the SDRT and send your notice by the 7th day of the month after the calendar month in which the agreement took place.
If the deadline falls on a weekend or bank holiday, your payment must reach HMRC by the end of the previous working day.
Missing the deadline may result in penalties or interest charges.
How to pay SDRT for off-market transactions
You must pay SDRT by bank transfer using the reference number you provided in your notice to HMRC. Using the correct reference number is essential – an incorrect reference will delay HMRC allocating your payment properly.
If your bank account is in the UK, use these details:
- Sort code: 08 32 10
- Account number: 12237210
- Account name: HMRC Stamp Office Shares Unit
If your bank account is overseas, use these details:
- IBAN: GB89 BARC 2011 4733 7025 96
- BIC: BARCGB22
- Account name: HMRC SDRT
All payments must be made in pound sterling (GBP). Your bank may charge you if you try to pay in another currency.
Payment timing
The payment method you choose affects how quickly your payment reaches HMRC:
- CHAPS or Faster Payments – you can submit your payment on the same or next day
- Bacs – allow 3 working days for the payment to reach HMRC
Check your bank's processing times and maximum transaction limits before making your payment.
Do not send a cheque to HMRC. If you cannot pay electronically, contact HMRC's Stamp Duty enquiries team for guidance.
Sources
This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.
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How to Get an SDRT Refund
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SDRT Compliance Checks and Penalties
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