Which type of financial instrument is subject to Stamp Duty Reserve Tax (SDRT)?

Stamp Duty Reserve Tax (SDRT) is applied to certain transactions involving financial instruments, and understanding the applicability of SDRT is crucial in tax compliance. Specifically, SDRT is levied on the transfer of UK registered shares. UK registered shares are shares that are registered in the UK and are subject to the rules and regulations pertaining to UK tax law.

When these shares are bought or sold, the SDRT is applicable at a rate that is typically a percentage of the consideration paid for the shares. The stamp duty system in the UK was designed to ensure that the transfer of ownership of shares is formally recognized and taxed appropriately, which the SDRT achieves for transactions involving UK registered shares.

In contrast, other types of financial instruments mentioned, such as certificated shares and corporate bonds, may have different tax implications or might not be subject to SDRT in the same manner. For example, overseas securities are often exempt from SDRT as they fall outside the UK jurisdiction for tax purposes. Thus, the unique characteristics of UK registered shares make them specifically subject to SDRT, which aligns with the requirements and objectives of the stamp duty system.