Simplifying tax: single Securities Transfer Tax proposed
Legislation to abolish the existing stamp taxes on shares and introduce a new single-tax regime for company share purchases has been tabled. It will particularly impact individual investors, brokers, intermediaries, financial institutions and others involved in the transfer of UK securities.
Under the existing legal framework, a combination of stamp duty and stamp duty reserve tax (SDRT) is payable on the purchase of company shares. Non-UK shares are caught by the rules if there is a UK register.
What’s proposed?
The draft legislation imposes a single Securities Transfer Tax on the transfer of shares in UK companies, with effect from 2027. The current stamp duty rate will be abolished; and the new rate will be fixed at 0.5% and a higher rate of 1.5% will apply where the securities are sold via a clearance service or depositary receipt service.
The purchaser will be required to report and pay the tax though an HMRC online portal. Companies will be unable to register the share transfers until any tax due has been paid.
The tax charge may arise when the agreement is entered into; when a conditional agreement becomes unconditional; or when the transfer is “substantially completed” (eg all or substantially all the consideration has been paid).
Note that tax must be paid within 14 days (electronic transactions) or 30 days for other transactions.
Will it apply to every share transfer?
No, not all share transfers will be caught. The new Securities Transfer Tax will apply to:
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