On 20 July 2021 the UK government published a summary of the responses to the consultation document on the modernisation of stamp taxes on shares.

The government had issued a call for evidence on the principles and design of a new stamp duty and stamp duty reserve tax (SDRT) in July 2020, following the publication of a report by the Office of Tax Simplification recommending the modernisation of stamp duty. In November 2018 the government published a consultation document on the alignment of the consideration rules in stamp duty and SDRT (which together are known as the stamp taxes on shares), and in a summary of responses in July 2019 the government suggested that the changes could only be taken forward in the context of a wider reform of stamp duty.

Responses

There were 33 written responses to the call for evidence, in addition to comments made in the public meeting.

The comments generally agreed that modernisation of stamp duty is necessary and there was support for the introduction of a single self-assessed tax for listed and unlisted securities, with digitisation rather than the traditional paper stamping methods. The commentators favoured measures that would reduce the period of time between the completion of a transaction updating the company share registers.

There was also support for maintaining the temporary measures introduced in the pandemic, as an interim step towards digitisation, and some improvements were suggested.

Next steps

The consultation is seen by the UK government as the first step in a project for modernising the stamp tax on shares. This will be a longer-term project and there may be a number of consultations and changes to the legislation.

A priority issue emphasised by respondents was to remove the requirement to physically stamp documents. The temporary measures in the pandemic gave taxpayers the option of electronic notification, with the government issuing a confirmation rather than physically stamping the document. On 18 June 2021, the government permanently adopted this measure, thereby permanently removing the requirement to physically stamp documents. The electronic process is now legally valid and the effect is that the transfer instruments are ‘duly stamped’ for all purposes. The feedback from respondents has also led to improvements to these processes.

The government is now looking at the other priority areas identified by stakeholders. Changes are being considered in relation to a single self-assessed tax on shares; territorial scope; and digitisation.

A Working Group is being set up to work in collaboration with stakeholders to develop policy proposals and draw up further consultation documents.