Stamp Taxes on Shares — Removal of 1.5% charge on issues and transfers integral to capital raising
Published 14 September 2023
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Who is likely to be affected
This measure will affect businesses involved in the issue or transfer of securities into depositary receipt systems or clearance services; and businesses which issue or transfer bearer securities.
General description of the measure
This measure amends the Stamp Duty and Stamp Duty Reserve Tax (SDRT) legislation to remove the 1.5% charge in domestic legislation on the issue of UK securities into depositary receipt systems and clearance services and on transfers linked with capital raising, known as ‘transfers integral to capital raising’.
The measure also amends the legislation to remove the 1.5% (or 0.2%) charge in relation to the issue of bearer instruments.
Policy objective
Following EU and UK court decisions in 2009 and 2012, HMRC recognised that the 1.5% Stamp Duty and SDRT charges on the issue of securities and transfers integral to capital raising were incompatible with the Capital Duties Directive.
UK legislation providing for the charge on these transactions was not amended as taxpayers are able to rely on the direct effect of EU law, and HMRC does not seek to collect the 1.5% Stamp Duty or SDRT on issues or transfers integral to capital raising (so no Stamp Duty or SDRT is collected on these transactions).
This measure provides legislative certainty to businesses that there will be no charge on these transactions going forward and supports UK competitiveness.
Background to the measure
Autumn Budget 2017 previously announced that the 1.5% charge would not be reintroduced on the issue of shares (and transfers integral to capital raising) into overseas clearance services and depositary receipt systems following the UK’s exit from the EU.
The effect of the Retained EU Law (Revocation and Reform) Act 2023 means that it is necessary for the government to legislate in order to maintain the 0% charge.
Detailed proposal
Operative date
The measure will have effect from 1 January 2024.
Current law
The current law in respect of the 1.5% charge is contained in:
- Section 131 Finance Act 1976
- Section 126 Finance Act 1984
- Sections 67 to 72A Finance Act 1986
- Section 79 Finance Act 1986
- Sections 93 to 97C Finance Act 1986
- Section 50 Finance Act 1987
- Section 143 Finance Act 1988
- Schedule 15 Finance Act 1999
Proposed revisions
Legislation will be introduced in Finance Bill 2023-24, removing the 1.5% Stamp Duty and SDRT charges on issues of securities into depositary receipt systems and clearance services and certain related transfers of securities.
The legislation will also remove the 1.5% (or 0.2%) charge in relation to the issue of bearer instruments.
The legislation will also make consequential changes, including in respect of an anti-avoidance provision which was introduced after the 2009 court decision but became redundant following the 2012 court decision.
Summary of impacts
Exchequer impact (£million)
| 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is not expected to have any impacts on individuals as it only affects businesses.
Equalities impacts
It is not anticipated that there will be impacts for those in groups sharing protected characteristics by this measure.
Impact on business including civil society organisations
The measure is expected to have a negligible impact on businesses which issue or transfer securities into depositary receipt systems or clearance services, businesses which issue depositary receipts or provide clearance services or SDRT settlement services and businesses which issue or transfer bearer securities. The measure maintains the status quo that is currently underpinned by direct effect of retained EU law. There will be a one-off cost of familiarisation with the new legislation. There is not expected to be any continuing costs. Businesses will benefit from the increased certainty provided by the change.
Customer experience is expected to remain broadly the same as it does not alter how businesses would interact with HMRC.
There is expected to be no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
Our analysis is currently confirming there are no financial consequences for HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact the Stamp Taxes Policy Team. Email: stamptaxes.budgetfinancebill@hmrc.gov.uk.