The new UK securities transfer tax: the final countdown?

It was confirmed last year that the UK will introduce a new single tax on securities to replace the existing outdated UK stamp taxes on shares regime. The key features of the new single tax were set out in a consultation response published in April 2025 and summarised in our previous blog post here.

Since then, draft legislation introducing the new UK securities transfer tax (STT) regime was published for consultation over summer 2026. We expect a revised version of the legislation (reflecting comments made during the consultation period) to be included in the upcoming Finance Bill and implementation of the new STT regime to happen “during 2027”.

This blog post highlights key points of detail we have identified in reviewing the draft STT legislation, including changes from the approach set out in the 2025 consultation response, and also considers the timing of when STT will, finally, be introduced.  

Tax base

STT will apply to transfers of “chargeable securities”, which primarily include shares and “equity-like debt interests” in UK incorporated companies. Helpfully, unlike the current SDRT rules, having a UK register will not bring securities within scope of the new regime – something which had been suggested as a possibility in the 2025 consultation response. 

The existing loan capital exemption from stamp duty/SDRT has broadly been translated into the STT regime via the “equity-like debt interests” concept, with the helpful practical result that plain vanilla debt should simply be out of scope. However, the existing exemption for non-marketable debentures has not been replicated - these currently fall out of scope even if they have equity-like features. This omission could cause difficulties in practice, including in loan portfolio transactions where large volumes of loans are transferred, as each instrument will need to be reviewed to ascertain whether it has equity-like features. We understand HMRC is reviewing this position and hope to see it addressed in updated legislation.

We understand the intention of the new rules is that transfers of partnership interests where the partnership assets include chargeable securities are only in scope of STT where a targeted anti-avoidance rule applies (although the legislation could be tweaked to put this position beyond doubt). This rule applies where it is reasonable to conclude that the underlying securities came to be held by the partnership primarily as a way of avoiding STT. This rule focuses on the circumstances in which the chargeable securities were acquired by the partnership, rather than on the subsequent transfer of the partnership interest. Given it will be for the buyer to assess whether this anti-avoidance rule applies, we anticipate this is likely to result in new information and protection requests to sellers of relevant partnership interests.  

Consideration

As regards the consideration on which STT will be chargeable, the draft legislation follows the approach set out in the 2025 consultation response, but there are some areas of the draft legislation that could still be refined to clarify the practical operation of the rules. 

For example, in relation to consideration which cannot or has not yet been determined at the point the charge arises, the amount of STT is to be determined initially on the basis of a reasonable estimate of the amount or value of any undetermined element of the consideration, before then being redetermined when the “exact” amount or value of that element “becomes clear”. This has the potential to cause practical difficulties. For example, if the relevant undetermined element involves non-monetary consideration, the value of that would need to be established according to (broadly) the open market value – but it can be difficult to isolate a single market value which could be viewed as the “exact” amount. In practice it will be important to be able to correctly determine the point in time at which the consideration “becomes clear”. This determination also triggers the obligation to amend the STT return, the due date for payment of STT, and determines the window for enquiries and the time limit for discovery assessments in cases where an element of the consideration was unknown at the charging time. Perhaps HMRC’s views on this can be addressed in the promised new STT guidance.

There is also potential for overlap between the circumstances in which the “wait and see” approach above applies and those in which a claim can be made for payment of STT to be deferred (which applies where an element of the consideration depends on uncertain future events) and it is unclear what the interaction between those two approaches is intended to be – clarity on this will be important to determine the correct approach for consideration mechanisms that involve completion accounts and earn-out payments. 

Reliefs and exemptions

Existing reliefs and exemptions from stamp duty/SDRT charges have broadly been carried over into the new STT regime, with the (expected) exception of the £1,000 de minimis exemption from stamp duty (although HMRC have again been asked to reconsider this position). 

However, various adjustments have been made in the STT version of several of the reliefs that require attention. In particular, the new group relief provisions are based on the corporation tax grouping definition (rather than the familiar stamp duty “associated companies” concept), which appears to narrow the scope of group relief as compared to the existing position. It is unclear if this is intentional. Various drafting tweaks have also been made to the capital-raising and listing exemptions, and it is also unclear why these have been made (and what their impact is intended to be) given these provisions have only recently been introduced. 

Taxpayers currently routinely rely on statements in HMRC guidance to obtain comfort as to whether a relief from stamp taxes will be adjudicated by HMRC as being available: for example, the guidance in the context of existing stamp duty reconstruction and acquisition reliefs on the meaning of “undertaking” and “business” and how subscriber shares are treated for the purposes of the mirror share-register conditions. In a new world where STT is a self-assessed tax without an adjudication process, it is suggested HMRC should consider addressing these and other similar points in the new STT legislation rather than continuing to rely on guidance. 

On a helpful note, the draft legislation expressly provides that the main 0.5% STT charge will not apply to a transfer where there is no change in the beneficial ownership of the chargeable securities and also that a transfer of depositary interests will not be subject to STT where the underlying securities are exempt from charge. 

Accountable person

The proposed regime also includes new provisions governing who can be the “accountable person”, with the associated obligation to account to HMRC for the relevant tax. A notable shift under the draft STT legislation for non-electronic transactions is that an adviser will be an “accountable person” for these purposes where they submit an STT return on behalf of their client. That in turn means that the adviser will become jointly and severally liable with the client for any STT relating to the transaction reported in the STT return. This is an unworkable approach for advisers for a number of reasons and, if retained, may ultimately result in some advisers being unwilling (or potentially unable for regulatory reasons) to submit STT returns on behalf of their clients. This would clearly raise significant practical issues for all involved. This message has been clearly delivered to HMRC as part of the consultation process, and it is hoped a more palatable approach will be included in updated legislation. 

Clearance service providers and depositary receipt issuers

The draft legislation also includes some changes to the regime applicable to the 1.5% higher-rate charge in relation to clearance service providers and depositary receipt issuers. These include:

• under the existing rules, the depositary receipt issuer or clearance service is both the liable and accountable person for the 1.5% charge. Under the draft legislation, the person liable for the STT is the “interested party” which is, broadly, the first person credited after the transfer with a book-entry interest / issued with depositary receipts in relation to the chargeable securities concerned. This change in the liable person for the 1.5% charge raises a number of practical and commercial issues, including that it is unclear how this is intended to fit into the wider STT payment, reporting and notification requirements for these arrangements; and
• a new widely drafted exemption is included in the draft legislation for securities “held by” a clearance service or depositary receipt issuer. This is a welcome attempt to streamline a plethora of overlapping and outdated provisions in the existing regime. However, in attempting to cover such a broad range of existing exemptions, the drafting necessarily ends up being so broad that there is arguably a lack of clarity on what the new exemption covers, including in the context of transfers between clearance services / depositary receipt issuers (insofar as it is unclear in that context if for the purposes of the transfer the relevant securities remain “held by” a clearance service or depositary receipt issuer at the relevant time, since by its very nature that transfer involves the securities coming out of one holding and entering another).

Transitional provisions 

As expected, the STT transitional provisions confirm that a STT charge does not arise if stamp duty/SDRT has been charged on the transfer. However, there does not appear to be a mechanism for a pre-implementation SDRT charge to be “franked” by payment of STT, which could present an issue for transactions that straddle the implementation date. 

When will STT come into force?

For market participants and businesses planning M&A transactions involving UK securities in 2027, clarity on the commencement date of STT is key. As mentioned above, the messaging to date has been that STT will be introduced “during 2027”. Given the intention is for the legislation introducing STT to be included in the upcoming Finance Bill, it can be assumed that the earliest STT will apply from is Royal Assent of the Finance Bill – which is expected to be towards the end of Q1 2027. 

Enacting the legislation is one (critical) part of a larger project to introduce the new STT regime. There are related substantial strands to this project including setting up the new STT portal (and making sure it is fit for purpose), producing new HMRC guidance and liaising with related third-party organisations - including CREST and Companies House - and allowing time for these organisations to make consequential changes to their systems and processes. Changes to CREST’s systems will also require market participants to make necessary related changes in their own operational processes. 

Taken together, we anticipate that the STT commencement date will be later in 2027 – and could even possibly be postponed into 2028. It would be preferable to give sufficient time to ensure all aspects of the new regime work well in practice, rather than rushing elements through – particularly as stamp duty/SDRT will still be collected in the meantime! 

An update on the commencement date is expected at the UK Autumn Budget 2026 on 28 October. We will be producing our usual UK Budget podcast discussing the key business tax announcements, which will of course include any updates on the implementation of STT.

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.

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