- 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. The previous government preference was 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 would 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 would 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.
- The Welsh government consulted between April and May 2024 on proposals to abolish land transaction tax (LTT) multiple dwellings relief (MDR) in Wales from 1 June 2024, with the aim of offsetting the impact to the Welsh Block Grant of the abolition of SDLT multiple dwellings relief. 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. Following feedback, and in particular, some concerns about the impact of the abolishing the reliefs on the housing supply, the Welsh government intends to investigate the potential benefits, costs and other impacts of options regarding the MDR and other LTT reliefs.
- 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. The consultation was run by the previous government and it is yet unclear how the current government intends to proceed. The summary of responses to the Welsh government LTT consultation was published on 17 July 2024.
Resources (click to open)
- Public consultation on land transaction reliefs (Welsh government, July 2024)
- Stamp taxes on shares modernisation (HMRC, consultation, April 2023)
