HMRC proceeds with its plans to modernise UK stamp duty on shares

As part of the government's Tax update spring 2025, HMRC has published its response to its consultation, which closed in June 2023, on proposals to reform the current dual stamp duty and stamp duty reserve tax (SDRT) charges on shares with a mandatory, single self-assessed tax on securities.

The response signifies another step in the digitalisation of the UK tax system to modernise and simplify stamp taxes, with the aim to introduce the single tax, its legislative framework and the online portal in 2027.

Reform modifications

HMRC will bring forward its proposals for reform broadly as outlined in its consultation, having made some modifications as a result of responses received during the consultation process:

• The new single self-assessed tax will be reported and paid (or relief claimed) through an online portal developed by HMRC. The Certificateless Registry for Electronic Share Transfer (CREST) will continue to be used for those transactions where it is possible to do so.
• The purchaser will be liable for the tax but the online portal will allow agents to be the "accountable person" for paying the tax.
• HMRC has confirmed that it is still minded to use the existing SDRT geographical scope for the tax (meaning that transactions involving UK securities would be in scope no matter where they are traded or where the parties involved are based) but it will give further consideration as to the potential impacts.
• A unique taxpayer reference number (UTRN) will be generated immediately on submission of the return and the company registrar will be permitted to write up the register of members on receipt of the UTRN (a change in position from the original consultation where the UTRN would have been generated upon payment of the duty).
• In line with current SDRT rules, the tax will apply to equity in UK incorporated companies, including securities with equity-like features (expected to be defined along similar lines to the current loan-capital exemption). HMRC has said in its response that it also intends to explore the possibility of using the scope of the single tax to legislate for the loan capital exemption in a different way, making it simpler and easier to understand.
• The existing stamp duty land tax rules for uncertain and unascertainable consideration will largely be followed for the new tax, including the ability to apply online for deferral, but with a new maximum deferment period of four years (an increase on the two years originally proposed), with an ability for an extension application beyond the four-year period up to a maximum of 12 years.
• There will no longer be a £1,000 de minimis for stamping a document and HMRC now plans (as a result of feedback) to remove the potential for additional burdens through providing the facility for the portal to produce the stock transfer form, purchase of own shares form (SH03) or certificate of confirmation with the UTRN included.
• Other key exemptions and reliefs will be retained which will be self-assessed by the taxpayer via the online portal without the need for HMRC adjudication. These include stamp duty group relief, reconstruction and acquisition reliefs, the growth-market exemption and intermediary relief.
• HMRC had proposed in its consultation that payment of the tax would be due within 14 days of the chargeable date (a reduction in the current time limit of 30 days), being the date of the agreement or, for a conditional agreement, the date the agreement becomes unconditional, with an overall two year time limit. Following concerns raised during the consultation to this reduced time limit, HMRC has confirmed that payment of the new tax will now be due by the "accountable date" which will be 30 days (for transfers taking place outside of electronic settlement systems) or 14 days (for those carried out in electronic settlement systems) from the earlier of substantial performance or completion.
• Transfers of partnership interests (where a partnership’s assets include stock or marketable securities), which are currently within the scope of stamp duty, will be taken out of the scope of the new tax. This will be achieved either through the way in which the scope is legislated or through a relief or exemption (alongside anti-avoidance legislation to prevent abuse).
• A full and enforceable compliance regime (which currently exists for SDRT but not stamp duty) is proposed for the new tax but, following feedback, the late notification penalties will be changed to a percentage-based regime.

Alongside the response to the consultation, HMRC has also published a consultation seeking views on aspects of the 1.5% higher rate stamp taxes charge, which applies to certain transfers of UK securities overseas, with a focus on reducing unnecessary legislation and improving clarity as the next step in this long term project.

Osborne Clarke comment

It is positive to see that the government is progressing with the much-needed reform of stamp duty to establish a new regime which is more modernised with simplified administration and which speeds up the registration of share transfers. It is also particularly welcome to see that HMRC has taken on board the responses made as part of the consultation to ensure the regime works from a practical perspective and is designed so as to achieve its aims.