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Where Taxpayers and Advisers Meet

SDLT and corporate transactions

Feedback
Posts:351
Joined:Thu Feb 23, 2012 10:26 am
SDLT and corporate transactions

Postby Feedback » Sat Jun 17, 2023 7:49 am

Good morning all

my post is regarding s75 and s77 reliefs that may or may not be available.

Three brothers have traded as one economic entity for a number of years however they operate via three companies(A, B and C) which has a mix of shareholdings for each of them. Would it be possible to create a single group with A as Holdco acquiring B and C with shares being issued in A to all shareholders so that the value of their shareholdings in A become equivalent to their combined values of shares in A, B and C prior to any restructure? By way of example, if the values of the shares held prior to restructure are £3m, £2m and £1m, the shareholdings in A would be 50/33/17 respectively post transfer.

Furthermore, if the newco D is then created at a later date and its entire share capital is allocated in the same proportion (50/33/17), can the share capital of A be transferred to D if the shares in D are issued to the shareholders as consideration?

The HMRC manual isn't the easiest document to read, so any pointers would be appreciated.

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: SDLT and corporate transactions

Postby bd6759 » Sat Jun 17, 2023 8:24 am

The manuals might be clearer than this post.

What is the relevance of SDLT to share reorganisations?

Which of the taxes acts are you referring to?

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Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: SDLT and corporate transactions

Postby Feedback » Sat Jun 17, 2023 10:02 am

Stamp is payable on stock transfers at 0.5%

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Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: SDLT and corporate transactions

Postby Feedback » Sat Jun 17, 2023 10:07 am

Finance Act 1986

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: SDLT and corporate transactions

Postby bd6759 » Sat Jun 17, 2023 11:10 am

So this is not about SDLT, which is a different animal.

SD is payable on acquisitions.

It is not payable on subscriptions for new shares.

It is not payable on certain transfers between corporate bodies.

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Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: SDLT and corporate transactions

Postby Feedback » Sun Jun 18, 2023 12:07 pm

yes its about SD, my bad, I refer to it as SDLT out of (bad) habit.

I'm aware of the relief, what I am asking is whether relief would be available in the case outlined above as the HMRC manuals suggest otherwise. To put more meat on the bones

A is valued at £1m is and owned entirely by Dave
B is valued at £2m and is owned 50/50 by Dave and Eric
C is valued at £3m and is owned 66/33 by Eric and Fred

Dave has value of £2m
Eric has value of £3m
Fred has value of £1m

If one of the companies, say A, is made topco and issues new shares to Dave, Eric and Fred in lieu of their shares in B and C, such their shareholding in A mirrors the value they held at the outset, is s75 relief available on the transfer of shares in B and C. HMRC suggests that it is only available if the shareholders before are the shareholders after, but its not clear if shareholders have to be mirrored by value of shares held overall (as is the case here) or by proportion of shares in each individual company (which is not the case here as the shareholdings in each company at the outset is quite different).

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Posts:351
Joined:Thu Feb 23, 2012 10:26 am

Re: SDLT and corporate transactions

Postby Feedback » Sun Jun 18, 2023 12:13 pm

above: for s75 read s77


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