Abolition of stamp taxes on recognised growth markets
The Government has confirmed that stamp taxes on purchases of securities on recognised growth markets are to be abolished from 28 April 2014. Currently there is a 0.5% stamp duty or stamp duty reserve tax charge.
The exemption will apply to securities that are admitted to trading on a recognised growth market and not ‘listed’ on a recognised stock exchange. Eligible securities will qualify for the exemption wherever they are traded and will be designated as exempt for stamp duty reserve tax in CREST at a static data level.
To qualify as a recognised growth market, a market must be a recognised stock exchange and meet one of two specified conditions:
- a majority of companies trading on that market are companies with market capitalisations of less than £170m in the qualifying period
- the market’s rules require that companies seeking admission demonstrate at least 20% compounded annual growth in revenue or employment over the three years preceding admission
Applications for approval of ‘recognised growth market’ status should be submitted to HMRC. A list of recognised growth markets will be maintained on HMRC’s website. The exemption is designed to boost equity investment into growth markets.