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The modernisation of stamp taxes on shares

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HMRC has published a call for evidence on the modernisation of stamp taxes on shares (see The call for evidence is wide-ranging and addresses fundamental aspects of the stamp tax regimes, requesting comments on issues such as a merger of stamp duty and SDRT and a move to digitisation of stamp duty processes.


The modernisation of stamp duty was recommended in a report by the Office for Tax Simplification in July 2017 entitled Stamp duty on paper documents: a way forward to reform, digitise and simplify. The government subsequently consulted on the modernisation of stamp duty and SDRT consideration rules, but this was abandoned as it was recognised this would have a more positive impact if part of a wider overhaul.

The paper recognises certain shortcomings of the current regime. Key issues include:

  • The current paper-based regime is inefficient and expensive to run. It increases the administrative burden on business and makes the UK a less attractive place to invest. It is also impractical for urgent transactions.
  • The legal position is that any instrument of transfer executed in the UK is in scope of stamp duty (regardless of whether it relates to a UK company). However, HMRC does not collect stamp duty on transfers linked to non-UK companies. This creates confusion and uncertainty for investors.
  • The laws on stamp duty in particular are widely regarded as anachronistic and in places date to the 19th century, making it inaccessible to those without expertise in the area. The rules can be ill-suited to modern business transactions.
  • Whilst the stamp duty and SDRT regimes are interdependent, the rules are not aligned, with inconsistent equivalent provisions and different reliefs.

The Covid-19 lockdown necessitated a temporary move to an electronic system. This has provided additional impetus to review and revamp the stamp taxes framework.

Call for evidence

The call for evidence is merely the first part of a consultation process, and the government does not anticipate any major legislative redesign until Finance Bill 2021/22 at the earliest.

The call for evidence focuses on six broad areas of the current stamp taxes regime. Respondents are asked about the following:

  • Which areas they think need to be addressed most urgently and whether the stamp duty and SDRT regimes should be amalgamated. The paper recognises that this issue split respondents to the earlier OTS review. It also recognises that since SDRT is designed to cater for the electronic transfer of securities, combining stamp duty and SDRT into one tax may still require some degree of separation because of the different ways in which the beneficial interest of the securities is transferred.
  • Whether the territorial scope of stamp duty and SDRT should be aligned. In particular, foreign securities are not exempted from stamp duty. In practice instruments to transfer them are usually executed and kept outside the UK and therefore do not require stamping. However, the need to carry out deals offshore to ensure that the transfer of non-UK securities is not brought within the scope of UK stamp duty gives rise to complication and additional transaction costs.
  • How notification should work, if there should be an element of self-assessment and how stamp duty should be linked to the registration of title to shares.
  • How payments and enforcement should operate going forward. The current stamp duty rules do not technically make the purchaser liable and there is no direct method of enforcement for HMRC.
  • How digitalisation should work.
  • What changes would be welcomed to stamp duty legislation generally.


The digitalisation of stamp taxes on shares fits into a wider move to modernise the UK tax system to make it more efficient and fit for the 21st century. In particular, the system for notifying and paying SDLT has already undergone a similar overhaul.

A digital solution will likely be positively received, in particular as the changes precipitated by the pandemic have shown the benefits of a paperless system. Stakeholders will welcome the chance to provide input on the current framework, which is often viewed as outdated and slow. Additionally, practitioners will embrace the prospect of a streamlined legislative base replacing the piecemeal nature of the law as it stands.

It should be noted however that the call for evidence does not encompass consideration of the abolition of stamp duty on shares altogether. Abolition has been considered before and, indeed, legislation was actually enacted in 1990 for the abolition of stamp duty and SDRT but was never brought into effect. UK stamp taxes generally apply more widely than other European countries and there is perhaps still a good business case to be made for the removal of this tax to make the UK stock exchange more competitive.

Responses should be sent by 13 October 2020 by email to:

Issue: 1501
Categories: In brief , Stamp taxes , SDLT , SDRT