What the new securities transfer tax means for stamp duty on shares

The change in plain terms

If you buy, sell or transfer UK shares, the tax that sits on those transactions is being modernised. The government has published draft legislation for a new Securities Transfer Tax, usually shortened to STT, which will replace the current combination of Stamp Duty and Stamp Duty Reserve Tax on transfers of securities. It is expected to take effect in 2027, with the legislation carried in Finance Bill 2026-27.

Here is the reassuring part first. For most clients this will not change the commercial rationale for a deal, and it is not designed to change how much tax you pay. The main rate is expected to stay at 0.5% of the consideration. What it changes is the plumbing: how the tax is reported, paid and administered. If you have ever dealt with a paper stock transfer form and wondered why the process felt like it belonged to another era, this is the fix for that.

The draft legislation was published in July 2026, with feedback requested by 7 September 2026, and an update on the exact commencement date is expected in autumn 2026. You may also see the same reform referred to as the Securities Transfer Charge, or STC, which was the label used in the earlier 2023 consultation. It is the same modernisation project.

Why the change is happening

The current framework has been seen as complex and dated for a long time, and for good reason. The UK runs two interdependent taxes side by side: Stamp Duty, which historically attaches to paper instruments, and SDRT, which generally applies to agreements to transfer chargeable securities. Keeping two overlapping regimes in step is exactly the kind of thing that creates uncertainty and administrative cost without adding anything for the taxpayer.

HMRC's stated aim is to replace the two with one clearer, digital-first tax that is easier and more certain to use, and to remove the reliance on non-electronic instruments and paper-based reporting. The wider policy goals behind it are tax simplification, market modernisation, and supporting the liquidity of the UK's capital markets. In practice, this is the sort of change that a finance team should welcome, because it takes friction out of a process rather than adding a new charge.

What actually changes for you

The core principles of taxing securities transfers are expected to stay broadly familiar, which is why HMRC believes most businesses can adapt with minimal disruption and does not expect new ongoing costs. The detail that matters is in the mechanics.

• Who pays and how. The STT is a self-assessed tax, payable by the purchaser, reported and paid through a new HMRC online digital service. That is a shift in responsibility and process that whoever runs your completions needs to understand.
• CREST-settled transactions. Where transactions settle through CREST, the tax is expected to continue to be collected through CREST, with only minor system changes. For most market participants dealing in listed securities, day-to-day life changes very little.
• Transfers outside CREST. This is where the most visible change lands. Private company share transfers, and other dealings that happen off CREST, will move onto the new digital reporting and payment service rather than the old paper route.

If your work involves private company shares, reorganisations or investment rounds, that last point is the one to sit up for. It is the same population of transactions that already needs careful handling on the holding company and share-reorganisation side, and the filing mechanics around them are what is changing.

One point of detail matters for anyone dealing in more specialist instruments. Alongside the 0.5% main rate, the draft retains a higher-rate charge, the equivalent of the existing 1.5% charge that applies where securities move into certain depositary receipt or clearance service arrangements. If your transactions are ordinary purchases of shares, this will not touch you. If they involve depositary interests or clearance systems, it is worth confirming how the higher rate is expected to apply under the new regime once the final detail is settled, rather than assuming the position simply carries across unchanged.

The transitional rules to watch

There is a sensible transitional bridge, and it rewards a little attention. Transfers entered into before the STT commencement date may remain within the existing Stamp Duty or SDRT rules where the reporting or payment falls due after commencement. HMRC has said these savings provisions will apply for four years from the start of the STT.

In plain terms, a transaction does not get pulled into the new regime just because it settles or pays slightly after the switch. For anything that straddles the commencement date, the sensible instinct is to record clearly when the transfer was entered into, because that is what determines which set of rules applies.

It also helps to see the switch as a date-driven event rather than a cliff edge. For a straightforward purchase that both completes and pays before commencement, nothing changes. For a transaction agreed under the current rules but settled once the STT is running, the four-year savings window is what stops it falling awkwardly between the two regimes. Keeping a clean note of the date each transfer is entered into, alongside the usual completion records, is the small piece of housekeeping that makes the whole transition a non-event.

What to do now

None of this needs to prompt any change to your plans for buying or selling shares. It does reward some quiet preparation, and the work is mostly organisational rather than technical.

Ahead of 2027, I would suggest that anyone regularly involved in share transactions does three things:

• Review your completion checklists. Wherever a checklist currently says "stamp the transfer" or refers to SDRT, that step will need updating to the new self-assessed, digital process.
• Confirm who is responsible for filing and payment. The purchaser is accountable under the STT. In a deal with advisers, brokers and intermediaries involved, it is worth being clear now about who actually presses the button.
• Keep an eye on the final legislation. The draft is open to feedback until 7 September 2026, and the commencement date is still to be confirmed, so the detail can still move. Anyone with a view on the practical workings has a genuine window to feed in.

The direction of travel is clear enough. The UK is moving from a paper-era stamp tax to a single, digital securities transfer tax, and the change is more about modernising the process than raising the cost. Get your checklists and responsibilities lined up before it arrives, and the switch should be a quiet one.

Frequently asked questions

When does the securities transfer tax start?

The Securities Transfer Tax is expected to take effect in 2027, with the legislation included in Finance Bill 2026-27. Draft legislation was published in July 2026 with feedback requested by 7 September 2026, and an update on the exact commencement date is expected in autumn 2026.

Does the STT change how much tax I pay on shares?

For most transactions, no. The main rate is expected to remain 0.5% of the consideration, and the core principles of taxing securities transfers stay broadly familiar. The change is primarily to how the tax is reported, paid and administered, rather than to the amount due.

What is replacing stamp duty and SDRT?

A single, self-assessed Securities Transfer Tax on transfers of securities will replace both Stamp Duty and Stamp Duty Reserve Tax. The aim is to move from two interdependent, partly paper-based taxes to one clearer, digital-first regime.

Who pays the securities transfer tax and how?

The STT is self-assessed and payable by the purchaser. Reporting and payment are made through a new HMRC online digital service, which removes the reliance on paper instruments and manual processes.

How are CREST transactions affected?

Transactions that settle through CREST are expected to continue to have the tax collected through CREST, with only minor system changes. The most visible new process is for transfers that happen outside CREST, such as private company share transfers, which move onto the new digital service.

What happens to transactions started before the STT begins?

Transitional savings provisions apply for four years from the start of the STT. A transfer entered into before the commencement date can remain within the existing Stamp Duty or SDRT rules where the reporting or payment falls due after commencement, so the date a transfer is entered into matters.

Is the securities transfer tax the same as the Securities Transfer Charge?

Yes, in substance. The reform was referred to as the Securities Transfer Charge (STC) in the earlier 2023 consultation, and the current draft legislation uses the name Securities Transfer Tax (STT). They describe the same modernisation of stamp taxes on shares.

What should businesses do to prepare?

Review completion checklists that currently refer to stamping or SDRT, confirm who is responsible for filing and payment given that the purchaser is accountable, and monitor the final legislation. There is no need to change commercial decisions about share transactions, only the processes that support them.