eToro to pass Stamp Duty Reserve Tax onto clients
Starting from November 6, 2023, online brokerage eToro will be passing a Stamp Duty Reserve Tax onto clients who open new positions in UK-listed stocks.
In the past, the broker absorbed this tax on behalf of clients who invested in UK stocks. However, it will now be passing this cost onto clients.
Stamp Duty Reserve Tax (SDRT) is a regulatory transaction tax that the UK government levies on the electronic purchases of all UK-listed stocks. It is currently set at 0.5% of the value of the stock purchase.
SDRT is only due on UK-listed stocks (real). eToro only offers UK stocks listed on the London Stock Exchange (LSE). If a stock is listed on the LSE, but it is not UK-listed, the stamp duty does not apply.
SDRT is not added to the purchases of ETFs containing UK stocks since the tax is taken and included in the ETF fees (which are included in the PnL of the ETF). With CFDs, the user does not take possession of the underlying stock. Therefore they are not subject to SDRT.
All users from any country who buy UK-listed stocks must pay SDRT. The tax is executed when the user opens a new position only. It is calculated as 0.5% of the total USD value of the opened position. If the calculated amount of SDRT is less than $0.01, there will be no tax applied.
When the user opens a Copy or Smart Portfolio position any UK-listed positions opened will include the SDRT as with manual trades. The same occurs when a copied user buys a UK-listed asset after the Copy/Smart investment is open.
eToro notes that it simply passes the tax on to the UK government. It does not mark up or retain any proceeds from the tax.
The fee will only be applied to new positions after the fee is introduced.