1. Waterfront Law
  2. Our Thinking
  3. Insights
  4. Securities Transfer Tax (STT): What UK Businesses Need to Know

The UK government has published draft legislation introducing a new Securities Transfer Tax (STT).

What is Securities Transfer Tax?

The UK government has published draft legislation introducing a new Securities Transfer Tax (STT). STT is a proposed new tax on transfers of shares and certain other securities and is intended to replace both Stamp Duty and Stamp Duty Reserve Tax (SDRT) from 2027. The reforms aim to modernise and simplify the taxation of share transfers through a single digital regime.

Importantly, the reforms are not intended to increase the overall tax burden on share transfers. Instead, the focus is on simplifying administration and modernising the current framework.

The proposed rates are:

  • 0.5% on most chargeable transfers of securities; and
  • 1.5% in certain circumstances, including some transfers into clearance services and depositary receipt arrangements.

Key changes to be aware of

Fully digital reporting

The government intends to introduce an HMRC portal through which STT will be reported and paid. Once a return has been submitted, HMRC will issue confirmation which can be used to register the transfer.

This should reduce delays commonly associated with the current Stamp Duty process and speed up share transfer registrations.

New rules for contingent consideration

The draft legislation introduces a single approach to contingent and deferred consideration. Where the final amount payable is uncertain, STT will generally be calculated using a reasonable estimate and adjusted later if necessary. This is likely to be particularly relevant for private company acquisitions involving earn-outs and deferred consideration.

Removal of the £1,000 exemption

The current Stamp Duty exemption for certain share transfers of £1,000 or less is not expected to continue under STT. As a result, some lower-value transfers that are currently exempt may become reportable.

Treatment of non-UK incorporated companies

Transfers of shares in non-UK incorporated companies should generally fall outside the scope of STT, regardless of where the transaction documents are executed or where the company’s share register is maintained. However, STT may still apply to certain UK depositary interests representing shares or equity-like debt in a non-UK incorporated company where that company is UK tax resident.

 

What does this mean for businesses?

For most businesses, the principal impact of STT will be on transaction processes rather than transaction costs.

Businesses involved in acquisitions, investment rounds, share transfers or corporate restructurings should review their transaction procedures once the final legislation is published. Although many familiar reliefs are expected to remain available, the draft legislation is not simply a re-statement of the existing Stamp Duty and SDRT rules.

When will the changes take effect?

The government currently intends STT to take effect in 2027. Transitional provisions are expected to apply for certain transactions entered into before the new regime comes into force.

 

How Waterfront Law Can Help With Securities Transfer Tax?

Waterfront Law can:

  • Advise on the impact of STT on acquisitions, investments and share transfers.
  • Review transaction structures and completion processes.
  • Assess the availability of reliefs and exemptions.
  • Update transaction documentation to reflect the new regime.
  • Support businesses through the transition from Stamp Duty and SDRT to STT.

If you are planning a share transfer, investment or corporate reorganisation, Waterfront Law can help you understand the practical implications of the proposed reforms and prepare for the introduction of the new regime. For more information, reach out to Andrew Gordon.