The New UK Securities Transfer Tax: 10 Key Points

On 13 July 2026, HMRC published draft legislation and a policy paper for the new Securities Transfer Tax (STT), as part of the wider modernisation of the UK Stamp Taxes on Shares regime. STT is intended to replace stamp duty and stamp duty reserve tax with a single, self-assessed and digitally administered tax. The government is aiming to introduce the new regime in 2027, with a further update on commencement expected in autumn 2026. The draft legislation remains subject to technical consultation, which is due to close on 7 September 2026.

The legislation is a major step in reforming an old—and often burdensome—regime, but it is not a rate cut. The main 0.5% rate, the higher 1.5% charge for relevant transfers into clearance services and depositary receipt arrangements, and most familiar reliefs (such as group relief) are expected to be carried forward. The main charge will also remain a purchaser-side tax as with the current regime. For many affected transactions, therefore, the most obvious change is not the headline tax burden or its incidence, but the mechanics: a shift to a more modern, digital and (hopefully) user-friendly regime.

The following paragraphs set out 10 key points from the draft legislation, relevant to both corporate transactions, including M&A, and finance transactions. These points may develop as the legislation progresses and as HMRC guidance is published.

Ten key points

1. Single tax

STT will replace stamp duty and Stamp Duty Reserve Tax (SDRT) with a single mandatory tax framework for chargeable securities. That should remove one of the main defects of the current regime: the need to navigate two interdependent taxes with different charging concepts, different procedures, and different routes to relief.

2. A reform, not a rate cut

As noted above, the main STT charge remains 0.5%, and the higher-rate charge for relevant transfers into clearance services and depositary receipt arrangements remains 1.5%. However, the retention of the current rate structure should be viewed alongside the narrower and more coherent scope of the new tax, including for non-UK companies, as explained below.

3. Private M&A gets useful timing accommodations

STT will apply to both electronic and non-electronic transactions, but the practical implications will differ. For electronic transfers, the new regime should largely build on the existing CREST-based SDRT collection model. That approach would be harder to apply wholesale to private M&A, where signing, conditions, payment and completion may occur at different times. The draft legislation therefore includes specific timing rules for non-electronic transfers. In many private-company share sales, the STT charge should not arise before substantial completion, such as payment of all or substantially all of the consideration or the buyer beginning to enjoy the voting or economic benefits of the shares. The filing and payment deadline should also be 30 days for non-electronic transactions, rather than 14 days for electronic transactions.

4. Registration of share transfers should be faster

Under the draft rules, share transfers in UK companies will not generally be registrable until HMRC's acknowledgement of receipt of the relevant STT return, or a statement that no return was required, has been received. This is similar in concept to the current position, where changes in share ownership generally cannot be registered until HMRC has confirmed that stamp duty has been paid, or that a relief or exemption applies. However, the new process should mean the relevant HMRC acknowledgement is available much sooner, which should accelerate registration.

5. The scope should be clearer for non-UK companies

The draft legislation applies principally to shares and equity-like debt interests in UK-incorporated companies, units in non-excluded unit trust schemes and related interests, rights, and options. That should simplify cross-border analysis: direct transfers of ordinary shares in non-UK-incorporated companies should generally fall outside STT, even if the company is UK tax resident, and regardless of where the share register is kept or where the transfer instrument is executed. The main caveat is that STT can still apply to a UK depositary interest representing shares, or equity-like debt, in a non-UK-incorporated company if that company is a UK tax- resident. Transfers of partnership interests, currently within the scope of stamp duty where the partnership holds stock or marketable securities, should also fall outside STT, subject to a targeted anti-avoidance rule.

6. Key corporate reliefs are being carried forward

The draft legislation carries forward a number of familiar exemptions, including for intra-group transfers, demergers, new holding company insertions and recognised growth markets. Many of the fundamentals of the existing stamp duty and SDRT reliefs are, therefore, being preserved. However, familiar should not be read as identical: a number of exemptions must be claimed in an STT return; the current £1,000 stamp duty de minimis does not appear to be carried forward; and the detailed conditions, exclusions and anti-avoidance provisions relating to the exemptions will still need to be checked for each affected transaction. Note also that rounding up to the nearest £5 will no longer apply—the charge is payable as 0.5% (or 1.5%, as the case may be) of the amount or value of the consideration, rounded to the nearest whole penny.

7. Uncertain consideration: a new framework

Deferred, contingent and variable consideration, common in private M&A transactions, can create complexity under the current stamp duty and SDRT rules. Under stamp duty, the appropriate treatment may depend on whether the future amount has a cap, a floor, both, an estimated figure or no clear figure at all. Under SDRT, the analysis is different because the charge uses a broader money or money’s worth concept. STT should cut through much of that complexity by applying a single statutory approach. Where an element of the consideration cannot be determined when the STT charge arises, the tax should initially be calculated by reference to a reasonable estimate and then adjusted once the amount or value becomes clear. In appropriate cases, payment of the STT on the uncertain element may also be deferred, but only on a claim and subject to conditions and statutory long-stop limits.

8. Ordinary debt should generally remain outside the charge

For finance transactions, the headline point is that the new regime should not materially change the analysis for most ordinary debt instruments. STT applies to chargeable securities, and the draft definition focuses on shares and equity-like debt interests in UK-incorporated companies rather than plain vanilla debt. That broadly preserves the familiar distinction in the existing rules between exempt loan capital and debt with equity-like features, currently reflected in section 79 of the Finance Act 1986. The draft legislation also usefully introduces an express statutory exemption for transfers of shares by way of security. This will often be relevant to finance transactions and replaces what is currently an exemption pieced together from first principles and HMRC guidance rather than found in a single clear statutory provision.

9. Non-UK debt issuers should have a simpler position

Direct transfers of debt instruments issued by non-UK-incorporated companies should generally fall outside STT altogether, even where the debt has equity-like features. That would be an improvement for taxpayers because it should reduce the need to analyse whether a register is kept in the United Kingdom, a point that can matter under the current regime.

10. Financial markets transactions still need careful review

STT should make this area of UK taxation easier to navigate, but its relevance extends beyond corporate M&A and ordinary debt instruments. Specific rules and exemptions will continue to matter for more complex financial markets transactions involving, among other areas, repos, stock loans, securitisations, qualifying transformer vehicles and hybrid capital instruments. The higher-rate charge will also remain relevant for transfers of UK shares and equity-like debt interests into clearance services and depositary receipt arrangements, subject to important exemptions for capital-raising and qualifying listing arrangements. Crucially, however, the draft legislation appears to preserve the broadly beneficial current treatment for securities held through those arrangements: issues, as opposed to transfers, into a depositary receipt arrangement or clearance service should not themselves trigger STT, and subsequent transfers within the relevant arrangement or service should generally remain outside STT, subject to any clearance service election.