Consultation outcome

Modernisation of Stamp Taxes on Shares Framework: 1.5% charge

Updated 13 July 2026

1. Introduction

The Stamp Taxes on Shares (STS) modernisation project seeks to replace Stamp Duty and Stamp Duty Reserve Tax (SDRT) with a single tax on transfers of securities.

Policy background to the 1.5% charge

Stamp Duty and SDRT are collectively known as STS. The taxes are interdependent, with SDRT relying on elements of the Stamp Duty regime for its operation. The principal charge for both taxes is 0.5% of the chargeable consideration paid. A higher 1.5% charge applies where UK securities are transferred overseas to a clearance service (or their nominee) or to a depository receipt issuer (or their nominee).

Once deposited in a clearance service or depository receipt issuer system, securities can be traded without a change in the underlying company share register, as the legal title of the securities remains in the name of the clearance service or depository receipt issuer, or that of its nominee. Subsequent transfers within the clearance service or depository receipt issuer system do not generally attract an STS charge, leading to the 1.5% charge often being referred to as a ‘season ticket’ or being the ‘price for entry’ into a clearance service or depository receipt issuer system.

In line with the principal 0.5% charge, the 1.5% higher rate charge does not apply to issues of securities. It also does not apply to certain transfers related to capital raising or listing arrangements.

Background to the modernisation project

HMRC is focused on becoming a trusted, modern tax and customs department that collects the tax due at minimal cost to customers and the Exchequer, in a way that makes it easy for customers to get their tax right, and operates fairly.

Following a report published by the Office for Tax Simplification in 2017, in which it recommended the modernisation and digitalisation of Stamp Duty, the then-government conducted an initial consultation on the STS consideration rules which concluded that changing a single aspect of the regime would be ineffective without considering the STS Framework as a whole. It was within this context that a Call for Evidence was published in 2020, to explore potential guiding design principles and options for the modernisation of STS.

In its response to the Call for Evidence, the then-government recognised the importance of 3 guiding principles, which would inform further work in this area. These are:

• simplicity
• ease of use
• clarity and certainty

In 2021, HMRC established an industry Working Group with which further extensive consideration was given to the shape of possible modernisation reforms. A consultation document published in 2023 built on those discussions, by seeking formal views on the resulting proposals for the 0.5% charge. A summary of responses was published in April 2025, setting out the government’s intention to introduce a single, self-assessed tax on securities to replace Stamp Duty and SDRT in 2027. Alongside the summary of responses, a further consultation document was published which sought views on certain aspects of the 1.5% charge, with the aim of making it easier for customers to interact with the regime, reduce unnecessary legislation, and improve clarity.

In November 2025, the replacement tax was named the ‘Securities Transfer Charge’. The final name is confirmed in the accompanying draft legislation as the ‘Securities Transfer Tax’ (STT).

The 1.5% charge consultation

The 1.5% charge consultation received 9 written responses from legal firms (3 responses), representative bodies (1 response), accountants/tax advisors (3 responses) and businesses (2 responses). The businesses and organisations that submitted written responses are listed in the annex.

Respondents welcomed the government’s plan to clarify and simplify the legislation in relation to the 1.5% charge, and in particular the goal of removing unnecessary or obsolete legislation.

Suggestions for additional guidance to help reduce operational uncertainties will be noted for the development of technical guidance to support the introduction of STT.

Comments received regarding the rules for liable and accountable persons in respect of the 0.5% charge are not covered by this consultation, but were reviewed while drafting the legislation.

Comments received regarding the abolition of the 1.5% charge and overall impact of STS on UK capital markets are outside the scope of this consultation and have not been considered further as part of this work. However, policy on all taxes is kept under continuous review and the suggestions made have been recorded.

Chapter 2 of this document provides a summary of the responses received and the government’s response. Chapter 3 outlines the next steps.

The government is grateful to all stakeholders who responded in writing to this consultation.

2. Responses

The consultation sought views on 8 questions covering various aspects of the 1.5% charge, focusing on proposals to reduce unnecessary legislation and provide better clarity.

Depository receipts

It has become common for depositary receipts to be issued in electronic book-entry form when securities are transferred to a depositary receipt issuer, with physical certificates only provided when a request is made for them to be in that form. The government is clear that depositary receipts issued in either electronic book-entry or physical form fall within the definition of a ‘depositary receipt’.

For STT, the government proposed not specifying the format of depositary receipts, in order to remove any doubt that it can encompass physical or digital receipts, or any other format that may come along in the future.

Question 1: Do you agree that the format of any depository receipt should not be specified in order to account for both paper, digital and any future format that they may take? If not, how do you think the government should account for the different types of receipt and futureproof the legislation as far as is possible?

5 respondents answered this question.

All respondents were very supportive of the proposal not to specify the form of a depository receipt. Comments were made on how the government could account for different types of receipts, including:

• clarifying that although the holder may have the right to have a physical receipt issued, such a receipt may not be issued unless demanded
• clarifying the description of instruments so that it goes beyond written documents
• changing the language used around ‘receipts’ and ‘instruments’ so that they are less associated with physical documents

A few respondents also commented that it would be helpful for the definition of ‘depository receipt’ to only appear once in the STT legislation.

One respondent also said they are not aware of any taxpayers taking the position that the 1.5% charge is not due if a physical depository receipt is not issued.

Government response

The government intends to proceed with the proposal set out in the consultation by not specifying the format of depository receipts in the STT legislation, and instead use concepts and language which are less associated with physical documents. This will reflect current practice and future-proof the legislation for any future changes to the format of depository receipts.

Market value rules

Feedback received previously has suggested that there is a lack of clarity about how the market value rules for connected persons work in relation to clearance services and depository receipt systems. The current market value rules are comprised of provisions which apply to both the 0.5% and 1.5% charges (found at sections 47, 47A, 48 and 48A of the Finance Act (FA) 2019), and rules specific to the 1.5% charge (found at sections 67, 70, 93, and 96 of FA 1986) for transfers otherwise than on sale to clearance services or depository receipt issuers, and transfers to a clearance service or depository receipt issuer as a result of the exercise of an option.

The government proposed keeping both sets of market value rules, but making the application of them clearer in legislation and guidance.

Question 2: Do you agree that the application of these rules could be made clearer in any single tax? If so, how would you suggest this could be achieved?

5 respondents answered this question.

Most respondents commented that the market value rules are not often triggered in relation to transfers to clearance services or depositary receipt issuers in practice, but agreed that the application of the rules would benefit from being made clearer. There were differing views on how this could be achieved, including suggestions to clarify various terms used in the current provisions.

A few respondents suggested such clarification would be better covered in guidance, e.g. by way of example scenarios where HMRC would expect the market value rules to apply. One respondent encouraged a single market value rule for all relevant transactions.

One respondent also commented that applying deemed market value rules detracts from simplicity and clarity, and that there may be difficulties in accessing all of the information required to ascertain whether the transferor and transferee are connected.

Government response

The government intends to proceed with the proposal set out in the consultation by keeping both sets of the market value rules in relation to connected persons, and aiming for maximum possible clarity in both the STT legislation and guidance.

Notifications

There are requirements for depositary receipt issuers and clearance services to notify HMRC at sections 68(3) and 71(3) of FA 1986, to ensure that HMRC becomes aware of both depository receipt systems that were previously not known to it, and where a business transfers shares into a clearance system for the first time. Stakeholders have previously suggested that these notification requirements could lead to duplicated reporting to HMRC, with both companies and clearance services or depository receipt issuers (or their nominees) providing notification.

Whilst this is considered to be necessary reporting, the government proposed clarifying that if a transaction has been notified to HMRC by one party, then there does not need to be a second notification by the other party to the same transfer.

Question 3: Do you consider that the notification requirements outlined have the potential to lead to double reporting to HMRC? If so, what would you change to ensure full coverage while removing the potential for double reporting?

5 respondents answered this question.

Most respondents were of the view that the notification requirements could lead to double reporting, although a few disagreed. Comments were made that more guidance is needed to enable market participants to fulfil the notification requirement, for example on the format and content, with one respondent suggesting the creation of an online notification system.

A few respondents also suggested that HMRC should publish a list of clearance services and depositary receipt issuers that have made such notifications.

Government response

The government intends to proceed with the proposal set out in the consultation by making it clear that such notifications are ‘one-off’ notifications, and each transfer only needs to be notified once to HMRC. The STT legislation will clarify that notification can be made either by the clearance service or depositary receipt issuer receiving securities of a UK company for the first time, or by the company whose shares have been transferred. Although the suggestion for an online notification system was considered, the associated cost would be disproportionate to the benefits derived.

A list of clearance services and depositary receipt issuers (and their nominees) to whom transfers of securities are subject to the 1.5% charge is already published in HMRC’s technical manual at STSM056040^{[footnote 1]}.

Bearer instruments

The 1.5% regime includes a charge on the transfer of bearer instruments in Schedule 15 to FA 1999. Bearer shares were abolished in 2015, and gradually replaced with non-bearer shares to take them out of circulation. Bearer debt instruments were not abolished so can still be used today. However, they are unlikely to be subject to STS as they generally qualify for the loan capital exemption.

The government proposed removing the charge to bearer instruments.

Question 4: Do you agree that a charge for bearer instruments is unnecessary in a single tax? If not, can you outline your thinking? How might removing the charge open up routes to avoidance?

5 respondents answered this question.

All respondents agreed that a charge for bearer instruments is now unnecessary. Most respondents also commented that they were unaware of any opportunities for avoidance by removing the charge.

Government response

The government intends to proceed with the proposal set out in the consultation by removing the charge on transfers of bearer instruments.

Paired shares

Paired shares are stocks of two separate companies, under the same management, that are traded as a single security and currently feature within the legislation. Stakeholders have previously indicated that paired shares are no longer a feature of the market.

The government proposed excluding references to paired shares from any new legislation, provided they are no longer a feature of the market and there are no potential avoidance avenues that cannot be covered by anti-avoidance legislation.

Question 5: Are paired shares still a feature of the market or likely to be used in future? If not, are there any risks (such as avoidance) attached to removing references to paired shares from legislation?

5 respondents answered this question.

Most respondents commented that paired shares are no longer a feature of the market, although one respondent commented that, despite being rare, paired shares did still exist for a few multinational enterprises. However, respondents confirmed that they saw no risks attached to the removal of refences to paired shares from the legislation.

One respondent also commented that they were aware of loans paired with shares.

Government response

The government is content that paired shares are no longer a widely used feature of the market, and intends to proceed with the proposal set out in the consultation by excluding references to paired shares in the STT legislation.

Instalment payments

Current legislation includes provisions at sections 93 and 96 of FA 1986 that outline the tax position where shares are bought and paid for in instalments. Stakeholders have previously suggested that these provisions are not used, are unlikely to be used in the future, and that they are unclear.

The government asked for feedback on whether provisions in relation to instalment payments are still required.

Question 6: Are the provisions on instalments still necessary? If not, have you known them to be used or do you think they will be used in the future? How would you make these provisions clearer or easier to understand in any new legislation?

5 respondents answered this question.

Nearly all respondents agreed that the instalment provisions are not used in practice and are unlikely to be used in the future. One respondent commented that the instalment provisions are not commonly used, but expected that they could be abolished.

Government response

The government does not intend to include provision for shares bought and paid for in instalments in the STT legislation.

Liable and accountable persons

Under the current 1.5% regime, the depository receipt issuer or clearance service is both the liable and accountable person for STS purposes.

The government proposed to bring the liable and accountable person in line with the liable and accountable person concept currently in SDRT, so that the transferee is the liable person and the depository receipt issuer or clearance service is the accountable person.

Question 7: Do you agree with the proposal to have the transferee as the liable person with the depository receipt issuer or clearance service as the accountable person? Are there any alternative approaches that you think the government should consider?

5 respondents answered this question.

Most respondents agreed with the government’s proposal, although a few expressed confusion around exactly what the proposed approach entailed. A few respondents questioned whether any benefit would arise from making the transferee the liable person.

One respondent commented that information about the charges applied by clearance services are not widely available, which could lead to uncertainty for the transferee, and that resolving this uncertainty should be a higher priority than seeking to attribute liability to the transferee.

A few respondents commented that the government should consider an alternative approach, with one respondent suggesting that removing liability but not accountability from clearance services and depository receipt issuers was unlikely to make a material difference.

Government response

It was clear from the responses that the definition of ‘transferee’ needed to be clarified. To confirm, in this context, the ‘transferee’ means:

• in the case of a clearance service, the person who is credited by the clearance service with a book-entry interest representing the beneficial interest in the chargeable securities
• in the case of a depositary receipt issuer, the person who has the right to be issued with the depositary receipt in respect of the chargeable securities

The government acknowledges the reservations expressed by respondents, but no suitable alternatives were identified. The government intends to proceed with the proposal set out in the consultation, so that the transferee will be the liable person, and the depository receipt issuer or clearance service will be the accountable person.

General analysis

The government sought to better understand the perspectives of shareholders and businesses on the benefits or otherwise of transferring securities to a depository receipt issuer or clearance service.

Question 8: What are the advantages and disadvantages of transferring securities to a depository receipt issuer or clearance service?

6 respondents answered this question.

Various views were expressed on the advantages of transferring securities to a depository receipt issuer or clearance service, including:

• easier access to overseas markets and larger pools of investors
• an efficient gateway for foreign investors
• increased liquidity
• an efficient means of facilitating the ownership and/or trading of securities;
• enabling a listing of depositary receipts rather than the securities themselves, due to, for example, local law requirements or regulatory reasons in jurisdictions outside the UK
• administrative efficiencies
• reduced settlement risks
• the ability to trade securities without further liability to STS

Suggested disadvantages included the:

• costs associated with holding securities within the systems, including conversion expenses and the potential for foreign taxes where dividend payments are made in a local currency
• additional processes involved where both shares and depositary receipts are held
• potential for reduced shareholder rights, as the terms of certain depositary receipts may not enable investors to participate in shareholder votes or receive dividends
• potential for double reporting to HMRC
• geopolitical risks, such as sanctions, currency fluctuations and foreign exchange rates, and cross-border regulatory actions
• 1.5% charge (including the complexity of the current rules) on entry to the systems

Government response

The government is grateful for the helpful insight provided by respondents which has been used to inform the final proposals for the 1.5% charge.

3. Next steps

Technical consultation

The government has today published draft legislation for STT. The technical consultation closes on 7 September 2026.

Alongside the legislative work, the government is designing and building an online service for the reporting and payment of STT for non-electronic transfers. A power was introduced in FA 2026, enabling HM Treasury to make changes to STS legislation. The power will be used to introduce secondary legislation which will allow HMRC to change the existing rules to allow taxpayers taking part in testing to self-assess their STS obligations and report transactions electronically via a digital service.

The timing of the legislation and the new digital service being in place will be aligned. The government is aiming to introduce STT and the new digital service in 2027 — an update on the commencement date will be provided in the Autumn.

Annex: List of stakeholders consulted

The government is grateful to all those who took time to send written responses to the consultation, each of which has been carefully considered.

The businesses and organisations that submitted written responses are as follows:

• Ade Tax
• Deloitte LLP
• Euroclear Bank
• Euroclear UK & International Limited (EUI)
• KPMG
• Sidley Austin LLP
• Slaughter and May
• UK Finance and the Association for Financial Markets in Europe (AFME)
• Weil London

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