Modernising UK stamp taxes on shares: finishing line (almost) in sight?

How long does it take to modernise an antiquated stamp taxes on shares regime dating back to 1891? Sounds like the opener for a (bad) joke perhaps, but now we know that the answer is: the best part of a decade. Eight years on from the Office for Tax Simplification (OTS) 2017 report that first mooted reform, and a call for evidence and two consultations later, HMRC have now said that we can expect a new and improved stamp tax regime to be in place from 2027.

Background

After a long and winding road following the publication of the OTS report in 2017, a consultation setting out detailed proposals for a new UK stamp tax regime was published back in April 2023 (the 2023 consultation). A discussion of the proposals in the 2023 consultation is available in our article here.

HMRC recently published the summary of responses to that consultation as part of a ‘Spring update’ package of materials published on 28 April 2025. The welcome headline news is that the UK government is planning to move ahead with the proposals to introduce a new UK single tax on securities (STS), broadly as set out in the consultation, but with a number of modifications to take account of feedback in consultation responses and some technical points of detail.

A new consultation published on the same day seeks views on particular technical points on the 1.5% stamp tax charges in the context of the design of the new STS regime (and, spoiler alert, does not contemplate that the 1.5% charges will be repealed). 

This blog post summarises key features of the new STS regime as confirmed in the recent consultation response and highlights updates following the consultation process.

Self-assessed tax

It is confirmed that the STS will be a self-assessed tax for which the buyer of the securities will be the liable and accountable person (although certain agents may also be an accountable person for these purposes). Stamp duty will be a ‘voluntary tax’ no longer.

The intention is to leave the CREST process for on-market transactions largely unchanged. 

For off-market transactions, the process will be digitised using a new HMRC online portal. The new portal will generate a unique transaction reference number (UTRN) immediately on submission of the tax return on the online portal (without a need to wait for HMRC confirm receipt of the payment) and registrars will be entitled to update company registers upon receiving the UTRN. Same day stamping should become a reality, without the need for complicated workarounds such as declarations of trust.

Charging point

The charging point for the STS will be the earlier of ‘substantial performance’ or completion, with ‘substantial performance’ defined as the date when the benefits of the shares are exercisable by the purchaser (e.g. dividend or voting rights).

In addition, the accountable date will vary depending on whether the transaction is on-market (14 days from the charging point) or off-market (30 days from the charging point). This should mean that in most off-market transactions the stamp duty charging point will arise on closing (therefore leaving the current position unchanged). It is welcome that HMRC has listened to feedback on this point adapted the approach they proposed in the consultation.

Geographical scope

The (actual or intended) geographical scope of stamp duty is a notoriously nebulous issue.

It is intended that the new STS will be charged only on transfers of shares in UK incorporated companies or (potentially) companies with share registers kept in the UK (thereby aligning STS with the existing geographical scope for SDRT). This is a step in the right direction – including because it ought to eliminate the need for stock transfer forms to be executed and retained outside of the UK.

The location of an electronic register can raise some tricky points in practice. Further guidance on this point from HMRC would be welcomed in the context of the new regime, but it would be even better if they were to remove the location of the share register requirement altogether. It seems that HMRC are not minded to remove it, but are giving further consideration to the point.

Tax base 

The STS will apply to transfers of equity securities and debt securities that have equity-like features (defined in similar terms to the existing loan capital exemption). The following will be out of scope: (i) the grant of call options and warrants (subject to an anti-avoidance rule); (ii) transfers of partnership interests (also subject to an anti-avoidance rule); and (iii) the grant of security interests. 

An update in the consultation response is that pre-2003 UK land transactions will be brought into the scope of the SDLT regime rather seeking to fold these into the new STS regime. This seems a sensible approach and will avoid carrying across an existing area of complexity into the new regime.

Consideration

As regards the consideration on which the new STS will be payable, it is confirmed that this will be based on the SDRT concept of ‘money or money’s worth’ and the existing more limited stamp duty concept of consideration (i.e. cash, debt or the value of any other stock or marketable securities) will be jettisoned.

As proposed in the 2023 consultation, the STS rules for unquantified considered will broadly follow the existing SDLT rules on unquantified consideration. In outline this means that:

• fixed contingent consideration will initially be treated as if it is paid in full and recalculated once the contingency occurs or it is clear that the contingency will not occur;
• unascertainable consideration (e.g. an earnout linked to profitability of a business over a future period) will initially be calculated by reference to a reasonable estimate (rather than a maximum amount as per the current stamp duty rules) and recalculated when the amount is determined; and
• ascertainable but unascertained consideration will initially be calculated by reference to a reasonable estimate and recalculated when the amount is determined (thus putting the existing “wait and see” stamp duty procedure on a statutory footing). 

The consultation response clarifies that formal valuations will not be required as part of the STS reporting process – a reasonable estimate will be sufficient (and guidance on what constitutes a reasonable estimate will be published). It is also proposed to allow for the deferral of the payment of stamp duty in the above scenarios until the relevant consideration is ascertained (up to a maximum of four years, or 12 years on application) – a welcome extension from the time periods proposed in the 2023 consultation.

Other points to highlight

As regards reliefs and exemptions from the current stamp duty/SDRT charges, the intention is to replicate the existing reliefs and exemptions in the new STS regime, but with some statutory tweaks, including to make the legislation clearer and reflect applicable case-law. 

An exception to this approach is the confirmation that the existing £1,000 de minimis exemption from stamp duty will not be carried over to the new STS regime.

Finally, the new STS will adopt the existing SDRT compliance regime, including penalties and interest, with some changes for notification penalties (including moving to a percentage based regime).

Consultation on 1.5% stamp taxes charges

As mentioned above, a relatively brief consultation on particular detailed technical points on the 1.5% stamp taxes charges was also published on 28 April 2025 and sits alongside the wider proposals to modernise the existing UK stamp taxes on shares regime. This consultation is open until 21 July 2025. 

Since the 2023 STS consultation was published, there have been some fundamental changes to the 1.5% charges, most notably that: (i) the 1.5% charges on the issue of chargeable securities have been repealed; and (ii) certain exemptions derived from pre-Brexit EU case law have been put on a statutory footing. These changes appear to have given HMRC some confidence that the 1.5% charges are now more workable in practice and only require some tweaks on particular technical points to “modernise” these rules.

It is expected any changes to be implemented following this supplementary consultation will be included in the legislation introducing the new STS regime, or could be introduced more quickly via provisions in the next Finance Bill. 

Next steps

The UK government intends to publish draft legislation implementing the new STS regime “in due course” with the aim of introducing the new regime, including the online portal, in 2027. We understand progress has already been made in building the new online portal and initial user research sessions are ongoing. 

This reform of the UK stamp taxes rules has been a marathon not a sprint, but it does seem that the finishing line might, finally, be in sight.

If you would like to discuss any of the points raised in this blog post in further detail, please contact the authors or your usual Freshfields contact.