Stamp taxes and share issuances: preserving the status quo for the 1.5% charge

On 14 September 2023, the UK Government announced that it will remove the 1.5% charge to UK stamp duty and stamp duty reserve tax on the issuance of UK securities into a clearance service (such as the Depositary Trust Company) or depositary receipt service (for example, American Depositary Receipts issued by US depositary banks).  The 1.5% charge will also be repealed for transfers of UK securities made in the course of capital-raising arrangements. 

This essentially preserves the position under EU law, under which the 1.5% stamp tax charges on the issue of securities and transfers integral to capital raising were declared incompatible with the Capital Duties Directive.  In a previous blog, we discussed one of the seemingly unintended consequences of Section 2 of the Retained EU Law (Revocation and Reform) Act 2023 (the so-called “sunset” clause), being the reintroduction of the 1.5% charge with effect from 1 January 2024 – fortunately this consequence now seems to have been identified and addressed. 

The measures will take effect from 1 January 2024.  Draft legislation for a four week technical consultation has been published alongside the announcement.  The intention is that the legislation will form part of Finance Bill 2024 which is expected to be introduced to Parliament in Autumn 2023 and passed next year.  Despite the announcement, there may therefore be some uncertainty before the legislation is passed, unless this timetable for enactment is accelerated.