Key facts
- SDRT is charged at 0.5% of the consideration paid for shares or securities.
- It applies to electronic share transactions settled through CREST (the UK settlement system).
- SDRT is automatically collected — you do not need to file a return or pay it separately.
- SDRT is a separate tax from both SDLT (which applies to land) and Stamp Duty (which applies to paper share transfers).
- Certain transactions are exempt, including gifts, transfers to charities, and shares in growth markets (such as AIM).
What Is SDRT?
Stamp Duty Reserve Tax (SDRT) is a tax on agreements to transfer chargeable securities (primarily shares and loan capital) for consideration. It was introduced by the Finance Act 1986 to tax electronic share transactions that could not be caught by traditional Stamp Duty (which requires a physical document).[2]
In practice, SDRT is the tax you pay when you buy shares electronically through a stockbroker, investment platform, or other intermediary. It applies to most purchases of UK company shares on the London Stock Exchange’s main market.
SDRT Rate
SDRT is charged at a flat rate of 0.5% of the consideration (the price you pay for the shares), rounded up to the nearest penny:[1]
| Share Purchase Price | SDRT at 0.5% |
|---|---|
| £1,000 | £5.00 |
| £10,000 | £50.00 |
| £50,000 | £250.00 |
| £100,000 | £500.00 |
There is no minimum threshold — SDRT applies to any purchase for consideration, regardless of the amount.
How SDRT Is Collected
SDRT is collected automatically through the CREST settlement system. When you buy shares electronically:[2]
- You place a buy order through your broker or platform
- The trade is executed on the stock exchange
- Settlement occurs through CREST (usually T+1, i.e. one business day after the trade)
- CREST calculates the SDRT and collects it automatically
- The tax is passed to HMRC
You do not need to file a return, fill in any forms, or make a separate payment. The SDRT is simply included in the total cost of your share purchase.
Note: Your broker’s contract note will usually show the SDRT as a separate line item alongside the share price, broker commission, and any other charges.
What Securities Are Chargeable?
SDRT applies to agreements to transfer “chargeable securities”, which include:[3]
- Shares in UK-incorporated companies
- Loan capital with certain characteristics (e.g. convertible loan notes)
- Rights to shares (such as nil-paid rights in a rights issue)
- Interests in shares (such as depositary receipts)
Exemptions from SDRT
Several important exemptions reduce the scope of SDRT:[1]
| Exemption | Details |
|---|---|
| AIM and growth market shares | Shares on AIM and other recognised growth markets are exempt |
| Gifts | Transfers for no consideration are not subject to SDRT |
| Charities | Purchases by qualifying charities are exempt |
| Intermediaries | Market makers and certain intermediaries acting in their capacity as such |
| Repurchases (repos) | Certain stock lending and repo arrangements are exempt |
| Government securities (gilts) | UK government bonds are not chargeable securities |
Tip: If you invest primarily in AIM-listed shares (for example, through an AIM-focused ISA for IHT planning), you benefit from the SDRT exemption, saving 0.5% on every purchase compared to main-market shares.
SDRT vs Stamp Duty on Shares
SDRT and Stamp Duty on shares are closely related but apply to different types of transaction:
- SDRT applies to electronic (paperless) share transfers settled through CREST
- Stamp Duty applies to paper-based transfers using stock transfer forms
- Both are charged at 0.5%
- If both SDRT and Stamp Duty would apply to the same transaction, the Stamp Duty takes priority and the SDRT charge is cancelled
In practice, the vast majority of share transactions are now electronic, so SDRT is far more common than paper Stamp Duty.
Frequently Asked Questions
What is the difference between SDRT and Stamp Duty on shares?
SDRT applies to electronic share transactions settled through CREST, while Stamp Duty on shares applies to paper-based transfers using stock transfer forms. Both are charged at 0.5%, but SDRT is collected automatically, whereas paper Stamp Duty must be paid manually before the transfer can be registered.
Do I need to do anything to pay SDRT?
No. SDRT is collected automatically when you buy shares electronically through a broker or investment platform. The tax is deducted as part of the settlement process through CREST. You will see it itemised on your contract note or transaction confirmation.
Is SDRT charged on AIM shares?
No. Shares traded on AIM (the Alternative Investment Market) and other recognised growth markets are exempt from SDRT. This exemption was introduced to encourage investment in smaller and growing companies.
Can I reclaim SDRT if a share purchase falls through?
If a conditional agreement to buy shares becomes unconditional and SDRT has been paid, but the agreement is later rescinded, you may be able to claim a repayment of SDRT from HMRC. However, this is uncommon in practice because most electronic transactions settle very quickly.
Further Reading
- Stamp Duty on Paper Share Transfers — the paper-based equivalent of SDRT
- What Is Stamp Duty Land Tax? — the separate tax on land transactions
- SDLT Glossary — definitions of key terms
- SDLT Rates History — how rates have changed over time
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Sources
- Tax on shares: Stamp Duty Reserve Tax — GOV.UK
- Stamp Duty Reserve Tax: the basics — HMRC
- Finance Act 1986, Part IV — legislation.gov.uk