Stamp Duty

Stamp Duty and Stamp Duty Reserve Tax

HMRC sets out their guidance on this at CRYPTO24000.

Stamp Duty is charged on instruments that transfer stocks or marketable securities, and interests in partnerships if the partnership assets include stocks or marketable securities.

Stamp Duty Reserve Tax (SDRT) is a related tax and is charged on agreements to transfer chargeable securities.

Transfer of exchange tokens

HMRC’s current view is that existing exchange tokens would not be likely to meet the definition of ‘stock or marketable securities’ or ‘chargeable securities’ and are therefore unlikely to be subject to Stamp Duty or SDRT.

For the transfers of exchange tokens to fall within the scope of Stamp Duty or SDRT, they would need to meet the definition of ‘stock or marketable securities’ or ‘chargeable securities’ respectively.

HMRC will consider this on a case-by-case basis, dependent on the characteristics and nature of the cryptoasset, rather than any labels attached to them.

Exchange tokens given as consideration

Exchange tokens could be given as consideration for purchases of ‘stock or marketable securities’ and/or ‘chargeable securities’.

For SDRT it is defined as ‘money or money’s worth’:

If exchange tokens are given as consideration, this would count as ‘money’s worth’ and so be chargeable for SDRT purposes. Tax will be due based on the pound sterling value of the exchange tokens at the relevant date.

For Stamp Duty, chargeable consideration is ‘money’, ‘stock or marketable securities’ or ‘debt’.

HMRC does not consider exchange tokens to be currency or money, so they do not meet the definition of ‘money’ for Stamp Duty consideration purposes. They will also generally not count as ‘stock or marketable securities’.

Broadly, ‘debt’ counts as chargeable consideration for Stamp Duty in the following scenarios:

• release of a debt – The seller has an outstanding debt to the purchaser (which could be in the form of exchange tokens). The seller transfers shares to the purchaser, and in consideration the purchaser releases the seller from the debt.

• debt is assumed – A third party has an outstanding debt to the purchaser (which could be in the form of exchange tokens). The seller transfers shares to the purchaser, and in consideration the seller is assigned the right to the debt from the third party.

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is paid on the acquisition of land and buildings over a certain price in England and Northern Ireland.

Transfer of exchange tokens

HMRC does not consider transfers of exchange tokens to be land transactions. This means that SDLT will not be payable on such transfers.

Exchange tokens given as consideration

Chargeable consideration for the purposes of SDLT comprises anything given for the transaction that is ‘money or money’s worth’. As a general rule, any non-monetary consideration should be valued at its market value on the effective date of the transaction.

Accordingly, if exchange tokens are given as consideration for a land transaction, these would fall within the definition of ‘money or money’s worth’ and so be chargeable to SDLT.