Is there stamp duty on bond purchases?

[TheMotorcycleBoy]

Hi, when purchasing bonds on the secondary market, is there a stamp duty charge as there is when buying (some) shares?

Is it a case of it being payable on some bonds but not others, if so, how do I know which ones have the stamp duty charge and which ones don't?

Thanks in advance,

Mel

[hiriskpaul]

In theory there should be no stamp duty on bonds. However I did once get charged stamp duty on Tesco 5.2% 2057, but a few weeks ago Hargreaves Lansdown refunded the stamp duty I paid. I get the impression that there are a small number of institutional issues like this incorrectly set up in CREST, flagged as liable for stamp duty. Institutional investors don't trade bonds through CREST, so it is only a small number of private investors who get stung with this problem.

[TheMotorcycleBoy]

In theory there should be no stamp duty on bonds. However I did once get charged stamp duty on Tesco 5.2% 2057, but a few weeks ago Hargreaves Lansdown refunded the stamp duty I paid. I get the impression that there are a small number of institutional issues like this incorrectly set up in CREST, flagged as liable for stamp duty. Institutional investors don't trade bonds through CREST, so it is only a small number of private investors who get stung with this problem.

Thanks.

Doing a bit more research online, I found this from the Telegraph (dated 2009, so could possibly have changed since then!)....

"SO BONDS CAN BE HELD IN AN ISA THEN?

Yes. As long as the bond has more than five years to go before its redemption date when you first put it in an Isa. So all the income you earn from the bond is taken tax-free. Another advantage of buying bonds is there's no stamp duty to pay. This is 0.5pc when buying shares."

Do you happen to know anything about the bond needing to have 5+ years to redemption in order to have it inside an ISA? It's not something I've seen anywhere else.

[swill453]

Do you happen to know anything about the bond needing to have 5+ years to redemption in order to have it inside an ISA? It's not something I've seen anywhere else.

I think that's changed now. The ISA Guidance Notes say:

Securities acquired before 1 July 2014 must have a minimum residual term of five years when purchased by an ISA manager

https://www.gov.uk/government/uploads/s ... me_ISA.pdf

Scott.

[Alaric]

I think that's changed now.

It was changed when the distinction between cash ISAs and Stocks & Shares ISAs was removed.

[hiriskpaul]

The 5 year rule was totally daft and thankfully has been removed.