The Government's draft legislation for a new Securities Transfer Tax (STT), published on 13 July 2026, was a bit of a landmark. Tax advisers will tell you, with a mix of shame and pride, that we still occasionally have to refer to nineteenth century legislation. The Stamp Act 1891 remains the foundation of stamp duty payable on share sales. The whole law in this area is a patchwork of bits of legislation spanning more than a century. It also incorporates a shadow system of 'stamp duty reserve tax' (SDRT) which applies when parties agree to transfer shares without using a stock transfer form (most commonly when shares are traded on an exchange, without physical documentation).
The whole thing is a mess and so reform and codification – in the form of this brand new STT - should be welcome. But spare a thought as one of the oldest bits of tax legislation still regularly referred to finally becomes obsolete.
The proposal replaces the overlapping and often unwieldy dual system of stamp duty and SDRT with a single, mandatory, self-assessed digital tax on the transfer of securities. The main 0.5% rate is unchanged. But for advisers who routinely work on a wide variety of transactions and reorganisations the practical implications deserve careful attention.
The legislation is still in draft form, and a consultation has recently closed which will likely lead to some changes around the edges. But the draft legislation feels very advanced, so we can start to feel relatively confident about the shape of the new law.
A lot is expected to stay the same. The rate is still 0.5% of the purchase price paid. Various reliefs (group relief, the demerger exemption and the relief for insertion of a new holding company) are all broadly preserved. So what are the major changes?
Coherence
The most widely welcomed aspect of the reform is the elimination of the awkward overlap between stamp duty and SDRT. Stamp duty is a documentary tax rooted in nineteenth-century concepts; SDRT taxes agreements rather than instruments. Navigating between them has long been a source of needless complexity. Not only do they interact in odd ways, the rules for each are similar but not identical. A single tax framework, with a single set of rules, should reduce friction considerably.
Speed
For private company transactions, one of the most significant practical improvements is that it should be possible to register transfers on the same day as filing, rather than waiting for HMRC to respond to an application. This facility will be particularly useful to help satisfy lenders' security requirements in financing, or to allow registration of pre-sale reorganisations. At the moment transactions must either suffer delays or use inelegant workarounds.
Deferred purchase price
Earn-outs and deferred consideration have long created headaches under the existing rules. The draft STT legislation introduces a single statutory framework under which a reasonable estimate of deferred purchase price is taxed upfront and then adjusted once the final amount is known, with the possibility of deferring liability to pay STT on the deferred / contingent elements. This will avoid many of the perverse outcomes of the stamp duty "contingency principle".
Removal of the £1,000 de minimis
The existing £1,000 price threshold before stamp duty is payable has not been translated to the new legislation, meaning that the 0.5% rate will be payable on all transfers, no matter the price (excluding pure gifts). While the scope of the old threshold had some ambiguities, it was useful when dealing with trivial transactions and helped eliminate unnecessary burdens for HMRC as collector. HMRC's view is that the online reporting platform eliminates the burden for them and they seem ... unsympathetic ... to the burden on businesses, investors and advisers. So despite substantial opposition in previous consultations it appears that this change is going ahead.
Loan exemption
The transfer of conventional loans / debentures (without hybrid 'equity-like' features) is typically exempt under the current rules. That exemption is broadly being carried across, but the structure of STT means that some changes are – advertently or inadvertently – being created. Non-marketable private company debentures are potentially in scope of the new STT if they have equity features whereas they don't fall within the scope of stamp duty rules at all. That could create additional diligence burdens on the sale of some loan portfolios.
Broadened concept of consideration
One of the many ways in which stamp duty is antiquated is that it only applied to specific forms of purchase price. Under STT this is now changing to a "money or money's worth" test which could bring additional kinds of non-cash consideration within charge if they are capable of being converted into money, or of direct monetary value. There will likely be an initial period of uncertainty regarding how this is measured in some cases. But the term 'money's worth' is used in other pieces of tax legislation so it's not a totally new concept.
Agent liability?
One feature of the draft legislation that has unnerved advisers is the suggestion that 'agents' for buyers might be jointly and severally liable with the buyer for any STT payable. It's not clear whether this is meant to apply just to 'full' agents with authority to contract on behalf of the buyer, or whether it extends to the humble and innocent lawyers who are reporting a transaction on behalf of their clients. If joint and several liability extends to advisers who are reporting a transaction through the STT portal then that is a massive disincentive for those advisers to assist their clients in the most useful way possible. We hope that this is clarified before implementation; imposing joint and several liability on advisers would be an extraordinary development.
Overall our view is that the proposals represent a welcome modernisation. HMRC needs to make sure that the tech side of the reporting works smoothly but by all accounts this has been years in the making, so there's reason to be cautiously optimistic.
