- Following a 2020 call for evidence, on 27 April 2023, HMRC launched a consultation document inviting views on the details of modernising stamp taxes on shares. Government preference is for a single tax framework for listed and unlisted shares largely following the stamp duty reserve tax (SDRT) model for ‘paperless’ shares, leaving substantially intact the regime for listed shares (which are subject to SDRT). The only changes affecting listed shares might be technical ones required by the abolition of stamp duty, e.g. new freestanding exemptions for certain intra-group and fund transactions.
- For the transfer of unlisted shares, the landscape will change more radically as the tax would be on the purchaser (rather than an instrument), who would be required to report and pay the tax through a portal within 14 days, on a self-assessment basis.
- Special treatment will be allowed for unlisted shares where ‘necessary and appropriate’, for example allowing deferral of final payment of the charge where consideration is uncertain or contingent.
- The reform would include narrowing the scope of the tax so it only applies to shares (and equity like debt) in UK incorporated companies and, subject to anti-avoidance, ceases to apply to the grant of options and transfer of partnership interests.
- Separately, following consultation, it was announced at Spring Budget 2024 that stamp duty land tax (SDLT) multiple dwellings relief (MDR), available to purchasers of residential property in England and Northern Ireland who acquire more than one dwelling in a single transaction or linked transactions, will be abolished for transactions with an effective date on or after 1 June 2024, as there was no strong evidence the relief is meeting its original objectives of supporting investment in the private rented sector. Transitional rules will apply.
- On 8 April 2024, the Welsh government announced a consultation seeking views on proposals to abolish land transaction tax (LTT) multiple dwellings relief in Wales from 1 June 2024, with the aim of offsetting the impact to the Welsh Block Grant of the abolition of SDLT MDR. Views are also sought regarding changes to the so-called ‘six-pack rule’ such that an acquisition of six or more dwellings in a single transaction would be chargeable at the higher residential rates of LTT rather than the lower non-residential rates at present.
- Timing: the consultation on the modernisation of stamp taxes on shares closed on 22 June 2023 but the timing of reform (if any) is yet unknown. SDLT MDR will be abolished for transactions with an effective date on or after from 1 June 2024 (transitional rules apply for contracts exchanged on or before 6 March 2024). The Welsh government LTT consultation closes on 19 May 2024.
Resources (click to open)
- Public consultation on land transaction tax reliefs (Welsh government, April 2024)
- Stamp Duty Land Tax: Abolition of Multiple Dwellings Relief from 1 June 2024 (HMRC, March 2024)
- Stamp Duty Land Tax: mixed-property purchases and Multiple Dwellings Relief (HMRC, consultation, November 2021, response, March 2024)
- Stamp taxes on shares modernisation (HMRC, consultation, April 2023)
