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Removal of 1.5% stamp tax charge: consultation closes on 12 October 2023

Last month, HMRC published draft legislation to remove the 1.5% stamp tax charge on issues of UK securities into depositary receipt systems and clearance services, and on transfers into such systems/services integral to capital raising (the '1.5% charge'). A four-week technical consultation on the provisions, which will form part of Finance Bill 2024, closes on 12 October 2023.

European and UK caselaw in 2009 and 2012 determined that the 1.5% charge was incompatible with the EU's Capital Duties Directive. However, given the direct effect of the Directive, UK legislation was not amended, and HMRC never sought to collect the duty.

Despite the UK government's assurance that the 1.5% charge would not be reintroduced following Brexit, concern arose that it might automatically be reinstated from 1 January 2024 when the supremacy of EU law ends (by virtue of the Retained EU Law (Revocation and Reform) Act 2023).

The draft legislation therefore provides welcome clarity of the government's intentions. However, some issues remain, for instance:


: although the legislative changes have effect from 1 January 2024, they will not be enacted until Finance Bill 2024 receives Royal Assent (likely Spring 2024). In the interim period, the 1.5% charge would technically apply, though it is hoped it would not in practice be levied.

Scopemade in the course of capital raising arrangements; a charge would therefore still arise on transfers that do not satisfy this requirement.

: the removal of the 1.5% charge only applies in relation to transfers that are

The government will hopefully address these issues in the coming months, with the Chancellor's Autumn Statement on 22 November 2023 providing an ideal opportunity.


tax, corporate m&a & capital markets, corporate tax m&a tax structuring taxation on transactions