Tax

On 28 April 2025, HM Revenue and Customs (HMRC) published a consultation outcome, including a summary of submissions received, in response to its 2023 consultation on the modernisation of the current stamp taxes on shares framework.

When launching the consultation two years previously, HMRC outlined a number of proposals, considered in a prior Weil Tax Blog, regarding the operation of a new, single tax to replace stamp duty on shares (Stamp Duty) and stamp duty reserve tax (SDRT). In its summary of responses, HMRC has declared its intention to proceed with the “vast majority” of its original proposals. For certain other proposals, HMRC has opted for a change of tack following stakeholder feedback.

The Current Framework

Stamp Duty arises as a 0.5% charge on consideration for instruments transferring stock and marketable securities. “Stamping” now takes place electronically, having replaced physical stamping in March 2020: instruments are submitted via email, following which HMRC emails a confirmation of stamping. 

SDRT takes the form of a 0.5% charge on agreements to transfer “chargeable securities”. As the scope of the two charges overlaps to some degree, SDRT is “franked” by a charge to Stamp Duty on a corresponding instrument of transfer relating to the transferred securities. In simple terms, therefore, Stamp Duty typically applies where a stock transfer form or other instrument is used to transfer securities, while SDRT applies to electronic or uncertificated transfers of securities (for example, via CREST).

Reform Proposals

Consistent with HMRC’s original proposals, Stamp Duty and SDRT are to be replaced by a single, self-assessed, mandatory tax. It will be reported and levied either via a new online portal provided by HMRC, in respect of paper-based transactions, or via CREST for uncertificated transfers.

HMRC is sticking with a number of its original reform proposals, including in relation to:

1. scope: the charge is to apply to non-government equity in UK companies, including stock and bonds with equity-like features, and partnership interests will no longer be in scope;
2. pre-clearance: a pre-clearance facility is intended to be made available in cases of genuine uncertainty, but will not be placed on a statutory footing (based on the omission of anything to the contrary in the response document, it also seems that HMRC will proceed with its original proposal to discontinue the current Stamp Duty assessment and adjudication process);
3. loan capital exemption: recognising a need for clarity about what is and is not in scope of the new tax, the government will explore the possibility of legislating for the loan capital exemption in a way that is “simpler and easier to understand”; and  
4. group relief: HMRC intends that group relief, currently available for Stamp Duty but not SDRT (requiring materialisation of shares where group relief needs to be relied on) will apply for the new single charge.

Perhaps most notably, despite the fact that 86% of respondents opposed the proposal, the government has stated its intention to proceed with the removal of the current £1,000 de minimis for Stamp Duty. In other areas, HMRC has adapted its original proposals following stakeholder feedback, as considered below.

Liable and accountable persons: HMRC originally proposed that only the purchaser (i.e., not an agent) would be liable and accountable for the new charge in non-CREST transactions. However, due to portal design considerations, HMRC has now confirmed that for both CREST and non-CREST transactions the purchaser or an agent may be the accountable person, depending on the facts of the transfer (and as is currently the case for SDRT). The purchaser will remain liable in all cases.

Charging point and accountable date: HMRC originally proposed that the new tax would become chargeable at the point of agreement or, in respect of a transfer subject to the fulfilment of conditions, the date those conditions are met, subject to an overall two-year time limit. From this chargeable date HMRC proposed a 14 day deadline for the payment of the new tax. Noting stakeholder concerns, HMRC has now provided that the new tax is to become chargeable at the earlier of substantial performance or completion, the former being the point at which a trade is matched in an electronic settlement system or the point at which the benefits of the shares become exercisable by the purchaser. Additionally, HMRC now intends to implement a 14 day deadline only for electronically settled transfers and retain a 30 day deadline for transfers outside of electronic settlement systems (i.e., similar to the existing timeframes for SDRT/stamp duty respectively).

Link to company registers and UTRN: HMRC initially suggested that a unique transaction reference number (UTRN) be generated on payment of the new stamp tax, and that company registrars would only then be permitted to update the share ownership register. Now, however, HMRC envisages that a UTRN would be issued on submission of the tax return, i.e., up to 30 days before the payment deadline. This represents a marked shift from current practice, under which company registrars must not only wait for Stamp Duty to be paid before updating share registers, but must also wait for HMRC to process the relevant stamping application (a process which can sometimes be subject to delays). The revised proposal is intended to assuage stakeholder concerns regarding undue delays, and aimed to ensure that same day transfers of share ownership can be achieved under the new system. 

Geographic scope: HMRC has confirmed its intention to adopt the current SDRT geographical scope rules for the new single tax. Transfers of UK incorporated companies’ securities would therefore be within the scope of the new tax, irrespective of where the transfer takes place. A complicating factor is that under the current SDRT rules, the securities of non-UK incorporated companies may be subject to SDRT if the electronic share register is kept in the UK. Noting concerns around determining the location of a share register and calls for the new single tax to apply only to UK incorporated companies, however, HMRC has also promised to give further consideration as to whether location of incorporation should be the only factor in determining geographic scope.

Consideration: HMRC has committed to utilising the current SDRT approach of “money or money’s worth” when defining the parameters of consideration for the new single tax. HMRC previously indicated that it would proceed with adopting existing stamp duty land tax rules for deferring charges in respect of uncertain, contingent and unascertainable consideration. HMRC initially proposed a maximum possible deferment of two years. Following the consultation, HMRC now intends to allow up to three deferment periods of four years each (for a total of twelve years).

Penalties: HMRC noted that it would proceed with the majority of its original proposals regarding compliance and penalties, subject to some changes to the percentage-based regime for notification penalties.  

Next Steps

HMRC aims to introduce legislation for the single tax in 2027 and is developing the online portal and draft legislation to this end.