Corporate Law Update: 26 April - 2 May 2025
02 May 2025This week:
- The Government confirms it intends to proceed with replacing stamp duty and SDRT on securities transfers with a new single transfer tax
- The ISSB is consulting on changes to IFRS Sustainability Disclosure Standard S2, which sets out specific climate-related disclosures
- The Financial Reporting Council publishes its annual report on structured digital reporting
Government to replace stamp duty and SDRT with new single share transfer tax
HM Revenue and Customs (HMRC) has confirmed that it intends to proceed with introducing a new single tax on securities transactions, which will replace the two existing UK taxes on share transfers: stamp duty reserve tax (SDRT) and stamp duty.
HMRC previously consulted on the proposal in April 2023. You can read more about HMRC’s consultation on a new single share transfer tax in our previous Corporate Law Update.
What are the UK’s current share transfer taxes?
There are currently two taxes in the UK that apply to transfers of shares.
Stamp duty is payable on instruments that transfer the beneficial interest in “stock” and “marketable securities”. This includes transfers of shares in most private UK companies, as well as certain instruments that can be “converted” into shares (such as convertible loan notes) and transfers of interests in partnerships that hold stock or transferable securities.
As a paper-based tax, stamp duty has long been perceived as an anachronism in the UK tax system that can cause significant delays – often weeks – in transferring legal title to shares to a buyer.
Stamp duty reserve tax (SDRT) is payable on agreements to transfer shares and other securities (so-called “chargeable securities”). It was introduced to deal with uncertificated, or “paperless”, securities, which can be transferred without an instrument of transfer and so do not attract stamp duty. Unlike stamp duty, which is assessed by HMRC, transaction parties assess their own liability to SDRT.
Stamp duty and (for the most part) SDRT are charged at the rate of 0.5%, with stamp duty being rounded up to the nearest £5 and SDRT up to the nearest penny.
In certain, limited circumstances, stamp duty and SDRT are charged at a higher rate of 1.5%. This applies when securities are transferred to a clearance service or depositary with a view to issue depositary receipts (DRs) so that the shares can be “traded” overseas.
Although introduced as a tax on electronic transfers of shares, SDRT also applies to agreements to transfer securities that do require an instrument of transfer. This means that both stamp duty and SDRT can arise on a single transaction. However, SDRT will not be payable if stamp duty is paid, the transaction is exempt from stamp duty or relief from stamp duty applies.
Stamp duty becomes payable when the instrument of transfer is executed, which, on a typical transaction, is at completion (or closing). SDRT becomes payable when the agreement to transfer the shares is made, which, on a typical transaction is at signing (or exchange). This mismatch in timing can, in some cases, cause difficulties.
HMRC has confirmed that the new tax (currently referred to as the single tax) would be introduced in 2027 and would operate as follows.
- The new tax would be mandatory and self-assessed (without requiring involvement by HMRC), broadly mirroring the SDRT regime. Liability to pay would rest with the buyer.
- The tax will apply to transfers of equity securities in UK companies (including stocks and bonds with equity-like features), wherever they are bought and sold.
- The tax will not apply to grants of call options or transfers of partnership interests (although there will be suitable anti-avoidance measures).
- Taxpayers will need to report taxable transactions and pay the new tax using a new online portal. HMRC will provide a unique transaction reference number (UTRN), which the buyer will need to register the transfer.
- Tax will arise “at the earlier of substantial performance and completion of the relevant transfer”. For on-market sales, this will be when settlement is matched. For off-market sales, this will normally be when the transaction completes (closes).
- Payment will be due within 14 days for on-market sales and within 30 days for off-market sales.
- Tax will be calculated based on the consideration for the sale, following existing SDRT rules.
- The existing exemption from stamp duty for transactions under £1,000 will be removed.
- Existing rules under both stamp duty and SDRT where the consideration is contingent or unascertainable will be replaced with new rules similar to those for stamp duty land tax (SDLT).
- The single tax will incorporate various familiar reliefs from the stamp duty regime, including group relief, reconstruction relief and acquisition relief.
- It will also incorporate a growth market relief, broadly continuing the existing SDRT relief for transfers of shares in AIM companies.
Separately, HMRC is consulting on proposals to modernise the existing regime under which stamp duty is charged at the rate of 1.5% when UK securities are transferred to a clearance service or a depositary receipt issuer. HMRC has asked for comments on these proposals by 21 July 2025.
Read HMRC’s consultation on changes to the 1.5% stamp duty and SDRT regime
ISSB consults on changes to IFRS Sustainability Disclosure Standard S2
The International Sustainability Standards Board (ISSB) is consulting on changes to International Financial Reporting Standard (IFRS) S2, which sets out specific recommended climate-related disclosures.
IFRS S2 is designed to complement IFRS S1, which sets out overarching disclosure requirements for sustainability-related financial information.
The purpose of the proposed amendments is to reduce the complexity of, and both the cost of and difficulty with applying, IFRS S2, particularly in relation to disclosure of greenhouse gas (GHG) emissions, without compromising the quality of the sustainability information disclosed.
The amendments would take the form of reliefs. Individual jurisdictions would be able to choose whether to make these reliefs available within their domestic reporting frameworks, and, if made available, issuers would be able to choose whether to take advantage of them.
The ISSB has asked for views by 27 June 2025.
FRC publishes annual report on structured digital reporting
The Financial Reporting Council (FRC) has published its annual review of structured digital financial and non-financial reporting by companies and other organisations.
The report will be of interest to those businesses that currently prepare their annual reports in digital format (i.e. in XHMTL) and which mark those reports up using iXBRL tagging.
In the report, the FRC highlights certain practices it has observed which are affecting digital reporting. These include unnecessary custom tags, incorrect tag-anchoring, mismatches between tags and the substance of the underlying content, and failure to include mandatory tags.
Read the FRC’s 2024/2025 report on structured digital reporting
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