UK and International Tax news
Removal Of 1.5% Stamp Duty Charge On Share Issues
Monday 25th September 2023
HMRC has confirmed that legislation will be introduced to amend the Stamp Duty and Stamp Duty Reserve Tax legislation to remove the 1.5% charge in domestic legislation on the issue of UK securities into depositary receipt systems and clearance services and on transfers linked with capital raising.
Following the ECJ decision in 2009 [HSBC Holdings and Vidacos Nominees] and the UK FTT decision in 2012 [HSBC Holdings and BNY Mellon], HMRC accepted that the 1.5% Stamp Duty and SDRT charges on the issue of shares in a UK incorporated company to a clearance service or to a depositary receipt issuer anywhere in the world were incompatible with the EU Capital Duties Directive.
UK legislation providing for the charge on these transactions was not amended as taxpayers have been able to rely on the direct effect of EU law. However HMRC does not seek to collect the 1.5% Stamp Duty or SDRT on such issues or transfers integral to capital raising.
In the Autumn Budget 2017, it was confirmed that the 1.5% charge would not be reintroduced on the issue of shares and transfers integral to capital raising into overseas clearance services and depositary receipt systems following the UK’s exit from the EU. The effect of the Retained EU Law (Revocation and Reform) Act 2023 means that it is necessary for the government to legislate in order to maintain the 0% charge.
Draft legislation issued on 14 September will be included in the Finance Bill 2023-24 to remove the 1.5% Stamp Duty and SDRT charges on issues of securities into depositary receipt systems and clearance services, certain related transfers of securities, and in relation to the issue of bearer instruments.
The measure will have effect from 1 January 2024.
If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.
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