HMRC's New 'Securities Transfer Tax' Is Replacing Stamp Duty on Shares — What Investors Should Know

Anyone who buys and sells UK shares — inside or outside an ISA — pays Stamp Duty Reserve Tax (SDRT) on most electronic trades without necessarily noticing it. That's about to change. On 13 July 2026, HMRC published draft legislation for a brand-new Securities Transfer Tax (STT), designed to replace both stamp duty and SDRT with a single, modern levy, according to GOV.UK.

What's actually changing

Today's system splits share taxation into two separate, centuries-old regimes: paper stamp duty on physical stock transfers and SDRT on electronic ones. HMRC's stated goal is to fold these into one self-assessed, fully digital tax, removing paper instruments and manual reporting entirely, per analysis from Mayer Brown.

Crucially for everyday investors, the rates themselves aren't changing much. The main 0.5% rate is expected to carry forward largely unchanged, along with the higher 1.5% charge that applies to certain transfers into clearance services and depositary receipt arrangements, and familiar reliefs such as group relief are also expected to be retained, according to Osborne Clarke. In practice, if you buy shares in a UK-incorporated company through a broker, you'll likely still pay roughly the same amount — just via a modernised, digital process.

Who's affected, and when

The draft rules apply principally to shares and equity-like debt interests in UK-incorporated companies, units in non-excluded unit trust schemes, and related rights and options — in other words, the bulk of everyday UK share and fund dealing. The government is targeting introduction of the new regime in 2027, with a further update on the exact commencement date expected in autumn 2026. The technical consultation on the draft legislation closes 7 September 2026, per Norton Rose Fulbright.

Why it matters if you invest

For most retail investors using a stocks and shares ISA or general investment account, this is largely a back-office overhaul rather than a change to your bottom line — brokers already build SDRT into settlement, and STT is expected to work the same way. Where it could matter is for anyone involved in private company share transfers, employee share schemes, or fund restructurings, where the current paper-based stamp duty process is often slow and manual. A fully digital tax should, in theory, speed up settlement and reduce administrative friction for these transactions.

International comparisons are instructive here: the US does not levy a federal transaction tax on share purchases, while several EU member states operate their own financial transaction taxes at varying rates, and Australia has no general stamp duty on listed share trades. The UK's 0.5% rate — soon to be collected as STT rather than SDRT — remains comparatively high by international standards, which is one reason reform campaigners have periodically called for it to be scrapped rather than modernised.

Key Numbers

• Main STT rate (carried forward from SDRT): 0.5% (GOV.UK)
• Higher rate for clearance/depositary receipt transfers: 1.5% (Osborne Clarke)
• Draft legislation published: 13 July 2026
• Technical consultation closes: 7 September 2026 (Norton Rose Fulbright)
• Targeted introduction: 2027

Sources

• Modernisation of the Stamp Taxes on Shares framework — Securities Transfer Tax — GOV.UK
• The New UK Securities Transfer Tax: 10 Key Points — Mayer Brown
• HMRC proceeds with its plans to modernise UK stamp duty on shares — Osborne Clarke
• Essential Corporate News: Week ending 17 July 2026 — Norton Rose Fulbright

Educational content only — not financial advice.