The long-awaited modernisation of the UK’s stamp taxes on shares has moved a significant step closer following the publication of draft legislation for a new Securities Transfer Tax (STT). The new regime is intended to replace the existing stamp duty and Stamp Duty Reserve Tax (SDRT) regimes in 2027 and will fundamentally change the way tax on share transfers is administered.
While the headline rate of tax will remain unchanged at 0.5%, the administrative process will be transformed, with HM Revenue & Customs (HMRC) moving to a fully digital, self-assessment model. For businesses involved in M&A transactions, share buybacks, employee share arrangements and group reorganisations, the reforms should significantly streamline share transfer processes.
What are the key changes?
A fully digital, self-assessed regime
The new tax will be administered through an HMRC online portal. Taxpayers will be responsible for reporting transactions, paying tax and claiming reliefs through the portal without the need for prior HMRC adjudication.
Reliefs claimed online
A number of existing reliefs and exemptions are expected to continue under the new regime, including:
• group relief
• reconstruction relief
• acquisition relief
• growth market exemption
• intermediary relief.
However, the most significant change is not the availability of the reliefs themselves, but how they will be claimed.
Under the current stamp duty regime, taxpayers will often seek adjudication from HMRC before relying on certain reliefs, providing a degree of certainty that the relief is available. Under the proposed STT regime, taxpayers will instead be required to self-assess entitlement to relief and claim it directly through the online portal without prior HMRC approval.
Whilst this should significantly accelerate transaction timetables and remove an administrative bottleneck, it also shifts greater responsibility, and risk, onto taxpayers. Businesses will therefore need to be comfortable that the conditions for relief are satisfied before submitting a return, particularly in the context of acquisitions, group reorganisations, share-for-share exchanges and other corporate restructuring transactions.
As a result, businesses will need to ensure they have undertaken the appropriate specialist advice upfront and have robust evidence supporting any relief claim.
The Birketts corporate tax team regularly advises on the availability of stamp tax reliefs in the context of M&A transactions, share buybacks, management incentive arrangements and corporate reorganisations, and can assist businesses in assessing whether relief is likely to be available before a claim is made under the new self-assessment regime.
Same-day share transfers
Perhaps the most significant practical change for private company transactions is that the portal will generate a Unique Taxpayer Reference Number (UTRN) immediately upon submission of a return.
The company registrar will be permitted to update the register of members on receipt of the UTRN, rather than waiting for confirmation that tax has been paid. This should enable same-day legal transfer of ownership and eliminate the need for declarations of trust that are often required under the current system.
Automated transaction documentation
The digital platform is also expected to generate:
• stock transfer forms
• SH03 purchase of own shares forms
• certificates of confirmation incorporating the UTRN.
This should reduce the administrative burden associated with share transfers and share buybacks.
New rules for deferred and contingent consideration
The current stamp duty “wait and see” and contingency principles for uncertain and unascertainable consideration will be replaced with rules broadly aligned with SDLT.
Taxpayers will be able to apply online to defer payment where consideration remains uncertain, generally for up to four years, with extensions available in certain circumstances for up to 12 years. This should provide a more straightforward framework for transactions involving earn-outs and deferred consideration.
The £1,000 exemption disappears
The existing £1,000 de minimis threshold will be abolished.
As a result, duty will potentially arise on all chargeable transfers for consideration, however small the transaction value. This is likely to bring a greater number of employee share transfers, option exercises and other low-value transactions within the reporting regime.
Tax rate unchanged
The main rate of tax will remain at 0.5%. Draft legislation also includes provisions for the existing 1.5% charge which can apply to certain transfers into clearance services and depositary receipt systems, although HMRC continues to consult on aspects of that regime.
New payment deadlines
Under the proposed rules, tax will generally become payable within:
• 14 days for transfers processed through electronic settlement systems such as CREST
• 30 days for transfers outside electronic settlement systems.
The deadline will run from the earlier of completion or “substantial performance”. In practice, substantial performance will generally arise:
• for electronic settlement systems, when transfer details are matched within the system
• for private company and other non-electronic transfers, when the purchaser becomes entitled to exercise the benefits attaching to the shares, such as voting rights.
Partnership interests remain outside the regime
Transfers of partnership interests will generally remain outside the scope of STT even where partnership assets include shares, subject to targeted anti-avoidance provisions.
Robust compliance and penalty regime
The new regime will also introduce a comprehensive compliance framework broadly modelled on SDRT.
Proposed penalties include:
• an initial fixed penalty of 5%
• daily penalties of £10 after three months
• a further 10% penalty after six months
• penalties of up to 100% after 12 months in serious cases.
The reforms therefore place greater emphasis on timely compliance and accurate self-assessment.
Looking ahead
The draft legislation confirms the government’s intention to replace the current stamp duty and SDRT regimes with a single, digitalised tax in 2027. While some operational details remain to be finalised, the direction of travel is now clear: faster transactions, fewer administrative delays and a modern self-assessment system, coupled with increased compliance obligations for taxpayers.
If you would like to discuss how the proposed reforms may affect your business or upcoming transactions, please contact a member of the Birketts corporate tax team.
Key Contacts
Audio versions of this article are autogenerated and occasional errors in interpretation may be made. The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article, please contact the author in the first instance. Law covered as at July 2026.