§ Mr. Peter Atkinson
To ask the President of the Board of Trade if British Gas plc will pay stamp duty on demerger. 
§ Mr. Lang
Section 75 of the Finance Act 1986 makes provision for the exemption of demergers from stamp duty if certain criteria are met. The intention of the legislation is to ensure that demergers involving no real change of ownership, as is the case with the British Gas demerger, qualify for relief from the duty. There must be an issue of shares to all shareholders of the transferor company, in this case British Gas plc, and after the transfer of shares, the proportion of shares held by each shareholder in the transferor company must be the same as the proportion of shares held by those shareholders in the transferee company, in this case Centrica plc. Except for the Government's special share, the British Gas demerger meets these requirements. The Government intend to continue to hold a special share in British Gas plc which, after the demerger, will be known as BG plc. In order, therefore, to allow the British Gas demerger to qualify for exemption from stamp duty, prior to the demerger, two ordinary shares, one in BG plc and one in Centrica plc, will be transferred to the Secretary of State and, on the demerger taking effect, a further share in Centrica plc will be issued to the Secretary of State. These arrangements will ensure that the British Gas demerger meets the conditions for this relief.